Indian Oil-ONGC axis for IPCL
L&T reveals pre-sellout RIL holding
Buddha chants retail mantra for Bengal
Ban k of India washes hands of mutual funds
Infotech bosses on Chinese mission
ITC scrip slumps on tax woes
Insurers want service tax withdrawn
Foreign Exchange, Bullion, Stock Indices

Mumbai, April 9: 
A two-horse team could be a surprise entry in the race to win the government’s equity in Indian Petrochemicals Corporation (IPCL). If they agree, Indian Oil Corporation (IOC) and Oil and Natural Gas Corporation (ONGC) could launch a joint bid for the 26 per cent stake that will be put on the block soon.

Though it is early days, sources say informal discussions are being held between Indian Oil and ONGC to discuss whether they can mount a joint bid for the petrochemicals major. “There is a possibility that both companies will team up for the stake,” a source pointed out.

IOC officials said they are unaware of any effort to rope in a partner. ONGC executives, too, denied the move. “There has been no information on the subject yet.”

Industry watchers say the IOC-ONGC alliance to wrest IPCL would mark an interesting turn in a battle till now dominated by Reliance Industries, the Colossus that has straddled India’s petrochemicals market.

IPCL’s takeover would consolidate Reliance’s now-invincible position in the sector. If the Ambanis come up trumps, their flagship would command more than 80 per cent of the market in ethylene alone, analysts say.

On the other hand, IOC, which primarily refines and markets petroleum products, has been planning a foray into petrochemicals—including paraxylene and PTA—for the past couple of years. That quest took it to Haldia Petrochemicals, where it has been offered management control. In addition, the Vadodara-based IPCL is a potential customer to whom the Fortune 500 company can sell the naphtha produced at its Gujarat refinery.

Many in the industry see the coming together of IOC and ONGC as a serious possibility also because that the two PSUs are already collaborating in several areas. Apart from owning a portion of each other’s equity, both have jointly bid for ten blocks under NELP.

Some analysts are of the opinion that getting control of IPCL would offer advantages to both. For ONGC, which recently signed a long-term agreement for supply of gas to the petrochemicals major, it would mark a landmark incursion into the downstream sector. For Indian Oil, which has little expertise in petrochemicals now, a partner could help minimise risks.

However, there are few analysts who do not see any benefit for ONGC if it owns some of IPCL.

“ONGC has a gas-supply agreement with IPCL, but this does not warrant bidding for equity stake in the PSU,” said Satyam Aggarwal, an oil analyst at Khandwala Securities.

Over the next few days, the government is expected to issue a formal notification calling for bids, which market circles believe should get offers ranging from Rs 90 to Rs 110 per share. Some optimists say there could be bids at Rs 130 too. The IPCL share closed at Rs 96.45 today.


Calcutta, April 9: 
The Reliance group, which sold a 10.05 per cent stake in L&T to Grasim Industries for a consideration of Rs 766.50 crore last November, had held only around 5.86 per cent in July 2001, according to filings made by Larsen & Toubro to the stock exchanges today.

The filings show that as of September 30, 2001, the only Reliance group firm that held a stake in L&T of over one per cent was Reliance Industrial Investments and Holdings Ltd. It held 3.71 per cent, or 92.21 lakh shares, on that date.

This means Reliance acquired a large chunk of the 10.05 per cent it sold to Grasim between July—possibly even September 30—and November, when the deal was sealed.

The shares in L&T were held through three firms—the flagship Reliance Industries, Reliance Industrial Investments and Holdings Ltd and Reliance Capital.

The Reliance group posted capital gains of Rs 360 crore by selling 2.5 crore shares in L&T at a premium of 47 per cent at a deal price of Rs 306.60 per share against the prevailing market price of Rs 208.

Reliance has been accused of insider trading in the deal with Grasim. The Securities and Exchange Board of India has already ordered an inquiry into the charge levelled by the Investors’ Grievance Forum headed by BJP MP Kirit Somaiyya.

Somaiyya has alleged that Reliance had acquired 85 lakh shares of L&T from the market in the run-up to the sale to Grasim. The L&T stock flared on the back of heavy buying ahead of the announcement of the deal.

The Reliance group has always maintained that it did not violate the guidelines on substantial acquisition of shares or the insider trading norms.

L&T’s filings with the stock exchanges today indicate that the Reliance group held 6.53 per cent on July 12, 2000—the record date for declaration of dividend for that year. By March 31, 2001, the Reliance group had marginally increased its holding to 6.58 per cent.

However, in the next few months the Reliance group’s stake in L&T declined, and L&T’s disclosures say that on July 5, 2001—the record date for dividend in 2001—the Reliance group’s holding was 5.86 per cent.

In the last financial year, the Life Insurance Corporation substantially increased its holding in L&T.

The insurance behemoth now controls 17.3 per cent of L&T compared with 13.87 per cent a year ago—an increase of 3.43 per cent. The Unit Trust of India has also raised its stake in the company in the last 12 months from 10.15 per cent to 11.38 per cent on March 31, 2002.

The foreign institutional investors, however, were sellers in the L&T stock during the last financial year. Their stake fell 5.58 per cent to 7.69 per cent as of March 31. The total foreign holding in L&T is pegged at 15.74 per cent, which includes global depository receipts.


Calcutta, April 9: 
Mesmerised by the success of Wal-Mart—a retail chain in the US which topped this year’s Fortune 500 list with total revenues of $ 2,19,812 million—Bengal chief minister Buddhadeb Bhattacharjee today picked retailing as one of the major pillars of the services sector.

Speaking at the annual session of the Confederation of Indian Industry (eastern region), Bhattacharjee said: “Our government has given constant attention to one of the most vibrant aspects of the services sector, namely the ‘retail’ sphere. World-wide, retail is almost always the largest source of employment in the private sector and I believe that a well-developed retail industry in any state can absorb between 8 and 10 per cent of its total employable workforce.”

“Maybe his idea of focusing more on retail has been guided by the recent declaration of Wal-Mart stores as number one in the list of Fortune 500 . It has become a much-talked about topic in Writers’ Buildings these days,” a senior commerce and industry official said.

The theme of CII’s annual session was ‘Emerging business opportunities in the services sector in the eastern region’.

CII president Sanjiv Goenka and Jharkhand chief minister Babulal Marandi were also present at the meeting.

The chief minister said the government has taken up the task of remodelling the commerce wing of the state’s commerce and industries department to assist the growth of the services sector. The commerce wing has been interacting with different organisations engaged in services such as trade, retail, finance, exports, construction and the like is coming up with strategies specific to the growth of each sector.

“Our recent success in the IT sector is well-known and its growth in the state continues despite the recession. We have engaged McKinsey & Co to assist us in formulating the business plan for development in the IT sector and also for agri-related industrial and services sector activities,” he added.

Bhattacharjee said the state is taking major strides in the areas of entertainment and communications.

The state government, in collaboration with the Government of Italy, has undertaken a project under which it will open a training institute and production centre near Salt Lake for making social communication films. The institute, Roop Kala Kendra, is expected to commence full-fledged operations by September this year.


Mumbai, April 9: 
Bank of India (BoI) today said it has sold its two mutual fund schemes to Taurus Mutual Fund, completing a plan to move out of asset management.

Earlier, it sold two schemes to Taurus, touching off speculation that the bank was quitting the business. The pullout is in line with a trend set by the Chennai-based Indian Bank, which had sold its mutual fund schemes to Tata TD Waterhouse Asset Management Pvt Ltd.

Market grapevine has it that Unit Trust of India (UTI) and Escorts Mutual Fund were among the others which had initially expressed interest in BoI Mutual’s schemes. BoI Mutual Fund had three schemes, two of which are of the close-ended variety. Market watchers see its exit as part of the consolidation sweeping the mutual fund industry. Recently, Templeton Asset Management announced it had wrapped up a deal for the takeover of ITI Pioneer, a Chennai-based mutual fund. More such re-alignments are expected in the industry. There is a buzz that Punjab National Bank is also in search of a partner for its mutual fund subsidiary.

BoI, which initially had an extended family of subsidiaries, has been working to achieve a lean structure over the past year. Its exit from the mutual fund business is part of that effort. At one point of time, it was looking at the possibility of merging BoI Finance with itself. BoI Finance had kept operations at a low key in the previous year. One of the reasons given in favour of the merger was that its merchant banking and project appraisal businesses were not picking up.

Last month, Templeton Asset Management (India), an arm of Franklin Templeton, signed a memorandum of understanding (MoU) to acquire Chennai-based Pioneer ITI AMC Ltd in a deal valued around Rs 250 crore. The buyout could create the largest private sector mutual fund manager, with assets over Rs 8,100 crore. It would be the second largest in size, after Unit Trust of India, dwarfing Prudential ICICI, HDFC and Birla Sun Life.


New Delhi, April 9: 
A hush-hush MAIT and Nasscom team has gone scouting for software and hardware business opportunities in China and Hong Kong.

The team will be visiting four places on the Chinese mainland—Shanghai, Shenzhen, Beijing, and Dalian. It will study the Chinese ICT (information and communications technology) industry and growth patterns.

Investment will be a two-way street—with Indian companies setting up bases in China and Chinese companies coming to India. This is a clear indication that the hoo-ha over HuaWei Technologies—which was accused last year of using Indian expertise to develop software and hawking it to the then Taliban-run Afghanistan establishment—is well and truly over.

The delegation headed by Rajeev Ratna Shah, secretary, information technology, in the ministry of communications, will meet the Chinese vice-minister for information industry and secretary, ministry of information technology of Hong Kong. The team went to China on April 5 and would return on Thursday.

It seems the government is all out to convince the investors that the investment climate in India is safe and the riots in Gujarat are just an aberration. So, the delegation includes an industry representative from Gujarat—Sunil Parekh, the head of Confederation of Indian Industry (CII), Ahmedabad.

Nasscom, the apex body of software companies, refused to divulge any details about its participation. Sources in the industry confirmed that S.P Ramachandran, a senior official, was representing Nasscom in the delegation to China and is scheduled to hold separate discussions with the Chinese software companies.

Mait, the apex chamber for the hardware industry led by its secretary general Vinnie Mehta, will also hold discussions with the Chinese hardware industry and explore the opportunity to manufacture and market companies of both countries.

The Electronics and Computer Software Export Promotion Council (ESC), a unit of the commerce ministry, is represented by D.K. Sareen, while the Electronic Component Industries Association (Elcina) is being represented by its president B.S. Sethia. National Informatic Centre (NIC), the division of ministry of communications and information technology is represented by two directors N. Vijayaditya and R.P. Chopra.

Sources in the communications ministry said, “The decision to send a team from India was taken in view of the growing threat from Chinese software professionals and also the industry. Our information is, Chinese professionals are slowly replacing the Indian IT professionals in the US and other parts of the globe.”

“The Chinese have not only mastered English but also have improved their competence in the latest computer languages. Our professionals will have to learn the latest to be in the market,” he added.


Mumbai, April 9: 
Market heavyweight ITC posted losses for the sixth consecutive day as sellers outnumbered buyers on the bourses over worries that the recent spate of taxes imposed by cash-strapped state governments on cigarettes could hurt the tobacco major’s bottomline.

The index heavyweight has shed a whopping Rs 1,913.6 crore from its market capitalisation of Rs 17,302.63 crore as on April 1, touching Rs 15,389.03 crore today.

Shares of the country’s largest cigarette maker dropped Rs 19.75, or 3.1 per cent, from the previous day’s close to Rs 627.10, as investors feared that the imposition of fresh taxes by the Delhi and Tamil Nadu governments could hit the company’s topline and bottomline. The ITC scrip has lost almost Rs 84.60 from a price of Rs 711.70 last month.

Analysts tracking the counter said the luxury tax of 20 per cent on tobacco products and the 10 per cent entry tax levied by Tamil Nadu will hit tobacco firms hard. They fear other cash-strapped state governments could follow suit and impose similar levies.

The company has not yet passed on the burden by hiking cigarette prices.


New Delhi, April 9: 
Insurance companies today urged finance minister Yashwant Sinha to remove the service tax imposed on them in this year’s budget.

Several insurance companies, including the Life Insurance Corporation, today sought the intervention of the Insurance Regulatory and Development Authority (IRDA) to take up the issue with the finance ministry.

According to IRDA member H.O. Sonig, “the Life Insurance Council has discussed a possible review of new businesses as well as rural and social sector obligations”.

He also said the definition of the rural sector would be re-examined by the Indian Institute of Management, Bangalore.

IRDA chairman N. Rangachary said the reduction of benefits under section 88 of the IT Act will have an adverse effect on the pension sector.



Foreign Exchange

US $1	Rs. 48.89	HK $1	Rs.  6.20*
UK £1	Rs. 70.04	SW Fr 1	Rs. 28.75*
Euro	Rs. 42.90	Sing $1	Rs. 26.25*
Yen 100	Rs. 37.15	Aus $1	Rs. 25.50*
*SBI TC buying rates; others are forex market closing rates


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. 7900	Silver (Kg)	Rs. 7865
Silver portion	Rs. 8000	Silver portion	   NA

Stock Indices

Sensex		3463.33		-16.84
BSE-100		1725.35		-10.33
S&P CNX Nifty	1126.70		- 8.55
Calcutta	 118.69		- 1.08
Skindia GDR	   NA		   —

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