Dividend deluge at Hero Honda
SAIL sets stiff target for Bokaro, Durgapur
Inter-ministerial talks on Jet Air chief’s links
Electrosteel ties up with Chinese firm
Mexico lists areas for JVs

New Delhi, April 13: 
Hero Honda has showered its shareholders with a whopping 850 per cent dividend—a return of a whopping Rs 17 on a Rs 2 share.

The 850 per cent payout comprises a 350 per cent final dividend and a 250 per cent celebration dividend that come on top of the special interim dividend of 250 per cent announced last October. The two-wheeler will be shovelling Rs 340 crore out of its cash reserves to its shareholders to meet the mammoth payout. Even after paying the dividend, it will have surplus cash of around Rs 500 crore.

While the special interim dividend and celebration dividend amounts to Rs 100 crore each for the company, the final dividend will cost Rs 140 crore.

Hero Honda’s payout is significant not only because of its size but also because it comes soon after a number of companies, including Reliance and the Tatas, withdrew their dividend offers in March after the Securities and Exchange Board of India ruled that companies would not be allowed to crimp rules and beat the April 1 deadline when a budget measure kicks in that makes dividends taxable in the hands of the shareholders who receive the largesse.

For Hero Honda, the manna for shareholders was announced on an auspicious day—April 13. “Our first bicycle rolled out on April 13, the first motorcycle was announced on April 13; the Dharuhera plant was opened on the same day. This year the date has brought us more—it has made us the world’s largest motorcycle manufacturing company,” said Brijmohan Lall, chairman of Hero Honda Motors Limited.

The celebration dividend of 250 per cent—the icing on the dividend cake—has been announced in honour of this feat.

Hero Honda’s net profit jumped by a whopping 88 per cent to Rs 462.93 crore on a 42 per cent rise in turnover at Rs 4,539.49 crore for the year ended March 31, 2002. The company had recorded a net profit of Rs 246.87 crore on a turnover of Rs 3,191.12 crore in the previous fiscal.

The company is planning to invest its cash either in a mutual fund or in a third plant that it plans to establish.

Ravi Sud, vice-president (finance), said, “The debt for the third plant will demand a 5-6 per cent interest rate where as our own investment will cost us 15 per cent interest. The company has not yet decided on the debt-equity mix for the third plant. The investment in this venture can range between Rs 70 crore and Rs 250 crore, depending on how much capacity the company decides to put in.”

Hero Honda this year clocked sales of 14.25 lakh motorcycles as against 10.29 lakh units sold in 2000-01. While their flagship model Splendor recorded sales of 7.57 lakh units against 6.93 lakh units the previous financial year, Passion—the latest model to be launched—registered sales of 4.27 lakh units against 35,000 in 2000-01.

“We have a 48 per cent market share in the motorcycle market, but only 33 per cent in the overall two-wheeler markets as the sales of step-thrus have been falling continuously. The target for next year is sales of 1.8 million units and garnering a market share of 35 per cent in the two-wheeler market,” said Lall.

The board of Hero Honda today announced that Pawan Kant Munjal would be the managing director of the company. Munjal said, “There are four products lined up for launch. Two will be introduced in the first quarter of this financial year whereas the other two are slated for early next year. We want to make our customer base more solid and will be offering a two-year guarantee instead of six months earlier.”

One of the two new motorcycles coming this year will be placed in the segment between Splendor and CBZ where as the other one will be in a niche segment. Hero Honda is also looking at building a scooters portfolio which it plans to introduce after its agreement with Honda Motor of Japan ends in 2004.

“We are looking at the portfolio now because any scooter that we select for possible launch will have to suit Indian conditions. We also want to study the market before going into this comparatively new market,” said Munjal.

Katsuro Suzuki, Honda’s senior managing director and chief operating officer, Asia and Oceania said, “We will be happy to share our scooter technology with the Hero group. They are very good marketing partners and we want to make the best out of this joint venture.”


Calcutta, April 13: 
The Steel Authority of India Ltd (SAIL) has set a stiff turnaround target for its two integrated steel plants at Durgapur and Bokaro during the current financial year. The combined losses of these two plants for the year 2001-02, however, might stand at over Rs 700 crore.

SAIL, however, will seek two more years—till March 2004—to make a complete turnaround, wiping out the current losses. SAIL was supposed to turn around by 2001-02 as per the memorandum of understanding signed by the management three years back with the government while its financial restructuring package was approved.

SAIL’s spokesperson said the company aims at registering net profits at Durgapur and Bokaro steel plants. The plant in Bhilai is already making hefty profits. “We are also determined to get even Rourkela Steel Plant (RSP) to make cash profits this year,” he added. Incidentally, RSP’s provisional losses may go up to around Rs 1000 crore for the year ended March 2002.

According to company insiders, the provisional losses for the plants at Bokaro and Durgapur stand at Rs 600 crore and Rs 97 crore respectively while the plant at Bhilai has made a profit of Rs 550 crore.

Asked how will the company, which is still burdened with extra flab, achieve such a stiff target in its loss-making constituents, the official said a blueprint for this has been prepared.

“Besides consolidation in terms of production volumes, the sales and distribution channel is being thoroughly revamped. This will help us become more market and consumer-friendly,” he said.

The other reason to be so optimistic is a great rationalisation of prices for the products, which will ease the net realisation during the current year, he feels. “What is most important is that domestic steel makers have understood, at least for once, that price cutting will not ultimately help. For the first time, we have noticed that everyone is firm about the prices,” he added.

The official feels that the long products market will remain steady while flat products will have some breathing space during the current year because of the worldwide cut in production. SAIL long products plants at Bhilai and Durgapur have already been on a very strong footing.


New Delhi, April 13: 
The civil aviation ministry plans to hold talks with the Union home ministry on the Intelligence Bureau (IB) report that Jet Airways chairman Naresh Goyal has had contacts with underworld dons Dawood Ibrahim and Chhota Shakeel.

Talking to reporters on the sidelines of an Assocham function here today, the new civil aviation secretary K. Roy Paul said, “We are not carrying out any investigations. The civil aviation ministry is not an investigative department; that job will be done by an appropriate agency”.

Paul added that the government had not approached the ministry to seek any help in this regard.

On the basis of the IB report, the home ministry had written to the civil aviation ministry asking to examine whether the security clearance given to Jet Airways needed to be reviewed. The inputs for the security clearance is given by the home ministry. The civil aviation ministry passes on the information to the Directorate General of Civil Aviation (DGCA), which grants or cancels licences on the advice of the home ministry.

The secretary also said that there was a plan to increase Air-India’s fleet. A committee set up in this connection had submitted its report. Paul said he had not seen the report and was therefore unable to say anything about how many new planes Air-India would acquire or the cost outlay that had been earmarked for the acquisitions.

Stating that Air-India’s lost glory needed to be restored, the secretary expressed the hope that the finance ministry would come to the help of Air-India and the Indian Airlines to enable them to fly to more destinations.

The secretary also said the road shows for leasing of airport land to private developers would begin on April 15 in the four metro cities and would soon be extended to other major towns. He also said with since the disinvestment of the PSUs under the ministry had been put on the backburner, the emphasis now would be to strengthen the state-owned airlines, acquire new aircraft and upgrade airport infrastructure.

Paul said he aims to make air travel cheaper. He said high air travel costs were primarily due to ‘high level of taxation”. The price of aviation turbine fuel in India is 30-35 per cent more than that in Dubai, he said.


Calcutta, April 13: 
Electrosteel Casting Ltd has tied up with Chinese firm Xinxing Ductile Iron Pipe (Group) Co Ltd to manufacture ductile iron pipe at its facility in Khardah. The company has also set ambitious export targets. It is aggressively exploring the export markets to sell the products.

“We will manufacture more of ductile pipes in collaboration with Xinxing at our newly acquired Calcutta Steel Co Ltd plant in Khardah,” said Umang Kejriwal, managing director.

He said due to sluggish growth in India, the company would target foreign markets with ramped up production and better economies of scale.

“Electrosteel is aiming for a 200,000-tonne output and Rs 200 crore export from Khardah in the next financial year. We badly need the economies of scale to face competition from the best in the world,” said Kejriwal, who was speaking at the inauguration of manufacturing facilities at Calcutta Steel which the company acquired at a cost of Rs 14 crore.

He said China and some other countries have achieved quick and complete conversion of cast iron plastic and asbestos to ductile iron, but the same was not happening in India.

In collaboration with Xinxing, Electrosteel will implement vacuum lost foam process for manufacturing castings that has the added advantage of producing non-polluting ductile iron pipes.

Kejriwal said after commissioning its first cast iron pipe factory at Khardah on the outskirts of Calcutta, the company has purchased a manufacturing unit at Elavur, Chennai.

He said in 1993-94 the company had set up India’s first ductile iron pipe at Khardah with an installed capacity of 60,000 tonnes per annum (TPA), which has been subsequently increased to 200,000 TPA.

The company has also set up a small diameter ductile iron pipe plant of 50,000 TPA capacity at an investment of Rs 45 crore to manufacture pipes of 80 mm to 300 mm diameters.

He said Xinxing has the faster, efficient and non-polluting technology for the production of a variety of castings.

“We will stand in the international market and compete confidently with the best in the world. We will do this right here from Khardah,” Kejriwal said, adding “today we have to compete with St Gobain pipe systems, the world leader with 1 million tonnes of pipe production.”

Xinxing chairman Fan Yingjun, who flew in from China, said about 10 years back, output of ductile iron pipes in China was almost zero. But now it has a capacity of 1 million tonne, of which Xinxing has 55 per cent share. “We meet the domestic demand and also supply to more than 40 countries.”

“From the development of China, we can foresee that the same will happen in India,” Yingjun said.


Calcutta, April 13: 
Mexico is keen to extend and enhance its business ties with India. To begin with it has identified agro-based industry, equipment and machinery for agriculture and food processing as possible areas for joint ventures.

According to Mexican ambassador Julio Faesler Carlisle, several business delegations from his country are scheduled to fly down soon to discuss business prospects with the central and state governments.

As part of this business development effort, the Mexican ambassador had met West Bengal chief minister Buddhadeb Bhattacharya and state finance minister Asim Dasgupta to discuss investments and trade in areas of agro-based industry, equipment and machinery for agriculture and food processing.

Leather industry, garments and software are the other areas where the Mexican government is interested in building up alliances. At present, exports from India to Mexico stand at $ 250 million while imports from Mexico amount to a mere $ 50 million.

Carlisle said that a delegation headed by Luis Ernesto Derbez, economic minister of Mexico, will arrive in Delhi on May 8 to discuss bilateral trade issues with the Indian government. The Mexican minister will also announce the setting up of an Indo-Mexican Council to facilitate enquiries for trade during his visit.

Another delegation is expected to reach Mumbai on June 30. The main areas which will be discussed with the Maharashtra government are, chemicals, pharmaceuticals, information technology and cinema and entertainment.

At present, around 80 per cent of foreign investments in Mexico are from the US, followed closely by the UK, Spain, France and Germany. Last year the foreign direct investment in Mexico was to the tune of $ 1200 million.


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