Price warrior Bharti girds for overseas call rate war
No more assured returns from UTI
Lenders debate sale of Dabhol Power assets
Javeri picks up stake in Dalmia, Hero group cos
FIIs up ACC stake by 15%
RIL investors clear plan to merge Reliance Petroleum
PowerGrid staff to fund plans
Infy Q4 net seen 11% higher
Shaw Wallace stock slides 20 per cent
Foreign Exchange, Bullion, Stock Indices

 
 
PRICE WARRIOR BHARTI GIRDS FOR OVERSEAS CALL RATE WAR 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 8: 
Telephone subscribers never had it so good: after a 62 per cent cut in STD rates in January, overseas call rates are set to tumble by 50 per cent — from Rs 41 a minute for a call to the US to around Rs 20 a minute.

The Mittal-owned Bharti group is in a strong position to start the rate war in the overseas telephony market after today’s inauguration of the undersea cable link between Singapore and Chennai through Network i2i, its joint venture with Singapore Telecommunication Ltd (SingTel).

The i2i undersea cable link is the world’s largest in terms of call-carrying capacity as well as the first private cable to link India and Singapore.

It will give Bharti the muscle to pare overseas call costs — an area that was thrown open to private operators on April 1 when Videsh Sanchar Nigam’s monopoly on this call traffic ended. This is exactly what the Bharti group did when it set up its IndiaOne Network — the company that handles STD calls in the country. It cut the STD call rate from Rs 24 per minute to Rs 9 forcing state-owned Bharat Sanchar Nigam Ltd to follow suit.

The once state-owned VSNL has itself come under the management of the Tatas who picked up a strategic stake in the company when the government divested its 26 per cent stake.

SingTel has invested $ 650 million in the Bharti Group and has an effective stake of 28.5 per cent in Bharti Tele-Ventures, the listed vehicle of the group.

Prime Minister Atal Bihari Vajpayee, who is on an official visit to Singapore, and Goh Chok Tong, Prime Minister of the Republic of Singapore, made an inaugural call via the i2i cable network to the Governor of Tamil Nadu, P. S. Ramamohan Rao, in Chennai.

The 3,200-km i2i cable lands in Chennai in India and Tuas in Singapore. It has been developed by Network i2i, a 50:50 joint venture between Bharti and SingTel, at a cost of $ 250 million.

Utilising the latest Dense Wavelength Division Multiplexing technology, the 8.4 terabits cable system can support 130 million internet dial-up connections simultaneously. Construction of the i2i cable network began in late 2000 and it will begin to carry commercial traffic within the next four weeks.

Lee Hsien Yang, president and CEO of SingTel, said, “The cable is linked to SingTel’s extensive network in the Asia Pacific and will enhance telecommunications connectivity between the Indian sub-continent and east Asia.”

“The completion of the i2i cable coincides very nicely with the recent liberalisation of India’s international long distance market. The cable will support Bharti’s introduction of ILD services,” he added.

Sunil Bharti Mittal, chairman and group managing director of Bharti Enterprises, said, “The cable will create huge bandwidth capacities that will help in making the Indian business environment increase productivity and fuel economic growth.”

SingTel and Bharti are looking at the possibility of extending the i2i cable network to other parts of Asia, including the Middle East, and Europe.

   

 
 
NO MORE ASSURED RETURNS FROM UTI 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, April 8: 
Unit Trust of India will not launch any more assured return schemes as part of a restructuring excercise, it will be undertaking.

A review meeting on UTI functioning held here at the finance ministry decided that the UTI Act will also be amended so as to bring it fully under Sebi supervision.

“UTI will not launch any more assured return schemes. The intention is to offer pure mutual fund schemes to pure mutual fund investors,” UTI chief M.Damodaran said.

The finance ministry has, however, ruled out bringing in a strategic partner into UTI at this stage, something which the Malegam panel had sought, officials said. To be Sebi norms compliant, UTI has to have a three-tier structure comprising a sponsor, trustee and asset management company.

Consequently, UTI will be converted into an AMC as recommended by the Malegam committee, Damodaran said, adding that the “trifurcation of functions is what is intended and not the trifurcation of the fund.”

Several key redemptions of UTI schemes are coming up for payouts this year and it is feared that the mutual may face another crash crunch around that time. It is this which has prompted UTI to decide not to go in for any more assured return schemes.

Most of the restructuring being considered for UTI is based on the Malegam panel’s report on UTI restructuring. The panel was set up soon after a joint parliamentary panel started probing the mutual fund’s purchase of dud shares even as the CBI conducted another probe into allegations of collusion between the mutual’s top management and shady brokers and corporates.

   

 
 
LENDERS DEBATE SALE OF DABHOL POWER ASSETS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 8: 
Lenders to Dabhol Power Corporation, the Indian subsidiary of bankrupt power utility Enron Corp, today opened a two-day meeting to decide whether to seize its $ 2.9-billion worth of assets and sell them, instead of offloading equity in the project.

Sources at Industrial Development Bank of India (IDBI) say if the assets are seized, the process of selling the plant — the largest single piece of foreign direct investment in India’s private sector — might have to follow.

If that happens, it would make the bids called in January for 85 per cent of the foreign equity, a pointless exercise. By seizing the assets, the lenders would now be selling the plant itself, IDBI officials said. The officials also met the bidders to see what they think about the sale, and appointed Amarchand Mangaldas, a legal firm, to advise the lenders on the issue.

More than 30 financial institutions have lent $ 1.9 billion to build the 2,184-MW gas-fired power plant and the adjoining LPG facility at Dabhol in Guhagar.

Enron, which had to live down the ignominy of being the largest US corporation ever to file for bankruptcy protection, has seen its legal and financial standing in disposing DPC being considerably weakened.

IDBI officials who took the initiative in holding today’s meeting said their brief was to apprise the lenders of the latest position and take a joint decision by Tuesday.

Dabhol Power project is Enron’s biggest asset outside US, and one of its most valuable properties. If the lenders seize its assets, many in the legal fraternity are of the view that Enron will lose the right to influence the bid price and how the proceeds are distributed. 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 a New York court. The ruling came as a big relief to financial institutions, which would have been the hardest hit if DPC was dragged into Enron’s legal quagmire.

The Indian institutions 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. Enron, observers say, had acted in this manner to obtain a US court directive to supervise the sale process.

GE and Bechtel Corp hold 10 per cent each in DPC, while MSEB controls 15 percent. 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 (MSEB) — Dabhol project’s only customer.

The project has been jinxed from the start, dogged by political and controversies of alleged payoffs to authorities.

More than 20 foreign lenders have sunk money in the project, including global financial majors like Citibank, ABN AMRO, Bank of America. In addition, there are multilateral agencies such as the US government-run Overseas Private Investment Corporation (OPIC). Among local lenders, IDBI, State Bank of India and ICICI Ltd are among those that have big exposures.

Seven companies have expressed interest in bidding for the plant. The potential multinational bidders include British Gas, Royal Dutch/Shell and French utility Gaz de France. Indian companies in the race are Reliance Industries, BSES, Tata Power Co and Gail.

   

 
 
JAVERI PICKS UP STAKE IN DALMIA, HERO GROUP COS 
 
 
BY ANIEK PAUL
 
Calcutta, April 8: 
Mumbai-based stockbroker Hitesh Javeri has acquired a 14.976 per cent in the Rs 1,200-crore Dalmia group company, Herbal Specialities (formerly Dalmia Industries Ltd). He has also amassed a 7.5 per cent stake in Gujarat Cycles—a company jointly promoted by the Munjals of the Hero group and the Gujarat government as a 100 per cent export-oriented enterprise.

When contacted, Javeri confirmed his holding in the two companies, but refused to divulge whether he had any takeover plans. “I do not punt on conventional market favourites. I am a long-term investor and see value in these companies,” he said.

Market watchers say the Javeris have traditionally relied on their own research and studies, and have acquired substantial stakes in a host of other companies at various points in time.

Javeri holds 10 lakh shares of Gujarat Cycles, and 4.5 lakh shares of Herbal Specialities, which he considers to be primarily an investment company though it has interest in ayurvedic medicine. He said he had acquired these shares from the market over several years. While his stake in Herbal Specialities was built over more than three years, he has been acquiring shares of Gujarat Cycles for over a year.

Both the companies have a relatively small equity base. While Gujarat Cycles has an equity base of Rs 13.34 crore, Herbal Specialities has an equity base of Rs 3 crore only.

Of the two companies, Gujarat Cycles has better financials than Herbal Specialities. The latter posted a loss of Rs 10.5 crore in the 2000-01 financial year as its performance declined steadily over the last few years. Gujarat Cycles had also slipped into the red and had to be referred to the Board for Industrial and Financial Reconstruction in the mid-nineties. But following a capital infusion by the promoters, the company came out of the BIFR net, and staged a turnaround.

In 2000-01, the company registered a net profit of 4.8 crore on a total income of Rs 70.8 crore. Acquiring management control of Gujarat Cycles is virtually impossible as the promoters hold over 60 per cent in it.

   

 
 
FIIS UP ACC STAKE BY 15% 
 
 
BY ANIEK PAUL
 
Calcutta, April 8: 
The foreign institutions have raised their holding in ACC, the country’s leading cement company, by close to 15 per cent during the last financial year. The total FII holding in ACC now stands at 21.45 per cent against 6.63 per cent a year ago. The FIIs hold 3.66 crore shares.

In the last quarter of the financial year, the FIIs increased their stake by 8.34 per cent, or roughly 1.43 crore shares. The domestic institutions and the mutual funds too have raised their stake in ACC, albeit marginally.

The mutual funds hold 6.87 per cent in the company, while the banks and financial institutions control 16.16 per cent. The Ambuja holds 14.45 per cent – the stake they acquired from the Tatas – while the public holding is pegged at 41.07 per cent now. The domestic institutions had increased their stake by about 6 per cent till December but sold out in the last quarter.

Analysts attribute the foreign institutions’ interest in the ACC stock to the ongoing polarisation in the cement industry and the government’s plan to invest heavily in infrastructure.

Meanwhile, in the other cement major, Larsen & Tuobro, the domestic financial institutions raised their stake by close to 5 per cent during the last financial year. The combined holding of the domestic institutions stood at around 37 per cent as of March 31, 2002. The foreign institutions, however, were sellers in Larsen & Toubro. Their stake fell by close to 5.5 per cent during the year.

ACC’s cement despatches during the year witnessed a 16.85 per cent jump to 12.28 million tonne from 10.51 million tonne in 2000-01. Cement prices, however, were depressed across the country.

   

 
 
RIL INVESTORS CLEAR PLAN TO MERGE RELIANCE PETROLEUM 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 8: 
The shareholders of Reliance Industries Limited (RIL) today approved the plan to merge Reliance Petroleum (RPL) with their company. Chairman Dhirubhai Ambani said his company has received proxies to the tune of 63 per cent of its equity capital.

Speaking to shareholders at the extraordinary general meeting (EGM) called today, he said the merged entity would make it to the Fortune 500 list, but would still have a long way to go in focusing on the size and scale of its operations vis-a-vis other global energy companies.

“Even after the merger, RIL’s sales, profits, and assets, will be less than 10 per cent of the largest global giants. Therein, lies the challenge, the opportunity as well as enormous potential for future growth,” Ambani said.

“We have set our sights higher. We have the advantage of being the market leaders for all our major products in one of the fastest growing markets in the world. The per capita consumption of Reliance’s major products in India is still amongst the lowest in the world, thereby indicating strong potential for future demand.”

Ambani said it will create the country’s only fully integrated energy company spanning oil and gas exploration and production, refining and marketing, petrochemicals, power and textiles.

   

 
 
POWERGRID STAFF TO FUND PLANS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 8: 
At a time when it’s becoming harder to get tightwad venture capitalists to shovel cash into new projects, here comes a new concept: the employee as an angel investor.

PowerGrid Corporation of India Ltd has decided to offer its employees the opportunity of investing in a slew of new transmission projects that it plans to establish with private companies.

Angel investors are typically those who are ready to pump in cash in potentially risky ventures or projects that aim to explore uncharted areas.

According to a preliminary proposal drawn up by PGCIL, the employees will be allowed to invest in the joint venture company. The employees of PGCIL will hold 51 per cent of the equity and the remaining 49 per cent will be held by the private company.

“We expect that each of the employees based on their position and their salary will be able to invest anywhere between Rs 50,000 and Rs 1 lakh. Based on the success of the pilot project, we will encourage participation by employees of other public sector units and government employees too.”

PGCIL does not plan to allow the general public to pick up a stake in the joint venture companies since it will disturb the monopoly of PowerGrid.

“The participation in the JV will be undertaken through a society to be formed consisting of PGCIL employees. This will then follow the necessary guidelines to pick up 51 per cent equity in the JV transmission company. Later, this may be expanded to accommodate employees of other public sector units and also government employees or a separate society can also be formed,” said Dr.V.K Garg. finance director of PGCIL.

“We are still preparing the guidelines and other details. The proposal will take final shape by June. This will be presented to the power ministry which will have to give the green signal,” he added.

However, this isn’t the first time that a public sector unit has asked its employees to invest in a new company. In 1999, Videsh Sanchar Nigam Ltd had offered its employees a slice of the equity pie in Videsh Sanchar Seamless Services Ltd (VSSL). Unfortunately, the file on the proposal was lost in the bureaucratic labyrinth and the company never saw the light of day.

The transmission sector had been opened up for private participation to hasten the setting up of a national grid. Private participation was to be allowed under two arrangements Ä by independent power transmission companies and another through a joint venture route.

Meanwhile, PowerGrid’s net profit dipped by Rs 18 crore to Rs 742 crore in 2000-01 from Rs 760 crore in the previous year. Turnover also fell to Rs 2600 crore from Rs 2683 crore in 2000-01.

The company earned Rs 2.5 crore from telecom services. PGCIL has leased out its bandwidth for an annual fee of Rs 7.50 crore to telecom service providers.

   

 
 
INFY Q4 NET SEEN 11% HIGHER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 8: 
Analysts expect Infosys to post a fourth-quarter net profit of Rs 202-220 crore, a growth of 11 per cent over Rs 182 crore in the corresponding period of last year.

Infosys, the first of the pack to unveil its numbers this season, is the centre of attention since its results will show whether there has been a turnaround in the sector. The consensus among analysts is on a 15-20 per cent rise in revenues and net profit in 2001-02. The estimates are based on the expectation that the pricing pressures and low volumes are unlikely to change, at least for the next two quarters.

Coming from the leading software services company, market circles said Infosys results and its guidance is expected to set the tone for the entire sector. “The markets will be looking forward to not only the fourth quarter results, but also guidance for this year and other issues like the clients won,” said an apprehensive broker.

Analysts added that in terms of topline performance for the quarter, its performance is likely to be in line with guidance given by the company in the previous year and it will be between Rs 640 crore to Rs 660 crore with some optimists putting it over Rs 670 crore against Rs 562 crore in the corresponding quarter last year.

It is largely believed that Infosys is likely to be faced with the situation of price pressures offsetting any volume growths (during the third quarter of the previous fiscal, while volumes grew 3.4 percent, but prices fell 3.2 percent) coupled to slow business growth from new clients for the initial two quarter of the current fiscal. Among the various verticals, the telecom segment is projected to be the worst hit in terms of billing pressures.

The company is likely to post modest sequential growth rates of around 2-4 per cent. “However, for the latter half, we could see profits and revenue growing by close to 8 per cent sequentially if the turnaround does occur,” says Tejas Barfiwala, analyst at Khandwala Securities.

   

 
 
SHAW WALLACE STOCK SLIDES 20 PER CENT 
 
 
BY A STAFF REPORTER
 
Calcutta, April 8: 
Investors of Shaw Wallace and Company reacted sharply to M.R. Chhabria’s death, forcing down the value of the share by 20 per cent in intra-day trading at the Calcutta and Bombay stock exchanges.

The liquor scrip being the only one currently traded out of a group of 10 highly diversified listed companies in India of Dubai-based Jumbo Holdings of MRC could come up for immediate scrutiny of the investors’ sentiment after the promoter’s demise last Saturday.

The SWC share came in for heavy bear hammering right from the beginning and opened at Lyons Range over Rs 7 lower at Rs 54.95 against the previous closing of Rs 62.20. Although the number of scrips traded in Calcutta was just about 5,100, SWC shares steadily went down to close nearly 20 per cent lower at Rs 49.80.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.89	HK $1	Rs.  6.20*
UK £1	Rs. 70.08	SW Fr 1	Rs. 28.90*
Euro	Rs. 42.91	Sing $1	Rs. 26.25*
Yen 100	Rs. 37.21	Aus $1	Rs. 25.45*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5115	Gold Std (10 gm)Rs. 4980
Gold 22 carat	Rs. 4830	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7900	Silver (Kg)	Rs. 7855
Silver portion	Rs. 8000	Silver portion	   NA

Stock Indices

Sensex		3480.17		-20.40
BSE-100		1735.68		- 9.98
S&P CNX Nifty	1135.25		- 6.70
Calcutta	 119.77		- 0.06
Skindia GDR	 562.44		+ 1.89
   
 

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