Morgan pill for CESC ills
Essar close to deal with RPL
Cadila offers Rs 300 a share for German Remedies pie
Bill to set up petro regulator cleared
Multinationals redeem faith in India
Spanner in Astra plan
Maharashtra charms MNCs
Calcutta port plans Haldia dock spin-off
DVC recast plan envisages two profit centres
Foreign Exchange, Bullion, Stock Indices

 
 
MORGAN PILL FOR CESC ILLS 
 
 
BY A STAFF REPORTER
 
Calcutta, April 18: 
CESC has appointed J.P. Morgan to assemble financial restructuring package that could help the company tide over a crippling cash-crunch.

A meeting of all creditors has been called on April 30, when the international consultant will make a presentation. The Bombay Stock Exchange has been informed about the meeting, which will discuss ways in which a portion of the debt can be shuffled to ease the liquidity squeeze because of the inadequate tariff revision.

CESC, staggering under a mountain of debt worth Rs 2986.86 crore, has been bleeding since 1998.

“CESC is passing through an extremely difficult cash position. It is necessary to review our financial position in a transparent manner with all the lenders,” managing director Sumantra Banerjee told The Telegraph.

This is the first time all creditors — including multilateral lending agencies like International Finance Corporation, Asian Development Bank, Commonwealth Development Corporation and global investment banker Kleinwort Benson Limited — will sit across the table with the management of the RPG group firm.

The multilateral agencies have lent the company Rs 606.36 crore in secured loans, while banks and financial institutions have an exposure of Rs 1,300 crore.

The R. P. Goenka-controlled enterprise owes its creditors Rs 2237.23 crore in secured loans and Rs 749.63 crore in unsecured loans.

Company sources say it is becoming increasingly difficult to service these debts, and that a breather is desperately needed at this stage.

For a start, the company must get its loans rescheduled, followed by an interest waiver. Some of these funds were raised at interest rates as high as 16-17 per cent.

“We will present a picture of the operations and financial condition before the creditors on April 30. After that, we will ask for a financial restructuring,” senior officials said.

It has also become necessary for CESC to review its loan portfolio following a directive from the West Bengal Electricity Regulatory Commission (WBERC).

WBERC has directed CESC to file with the tariff petition for 2002-03 more details pertaining to loans taken separately from recognised and unrecognised institutions, specific purpose of loan, actual utilisation and effective steps taken to reduce the loans and rates of interest as certain rates at which loans have been taken are very high from even recognised institutions.

   

 
 
ESSAR CLOSE TO DEAL WITH RPL 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, April 18: 
Essar Oil Ltd (EOL), the flagship of the Ruias, is in talks with Reliance Petroleum Limited (RPL) to source high-speed diesel (HSD) and motor spirit from the latter’s Jamnagar refinery.

According to sources in EOL, which is Reliance’s only private sector rival in the refinery sector, talks had reached an advanced stage with the discussion now focussed on the nitty-gritty of how much refinery products would be lifted and at what price.

The RPL refinery which is located very close to EOL’s in the same region provides some “local advantage”, which is important because the cost of procurement will be less.

“EOL is, however, also in talks with other refineries in the country owned by the public sector companies. The refineries have surplus HSD capacities. We hope to get the product at the right price and in the required quantity,” sources added.

EOL is making arrangements to source refinery products from the domestic refineries at least till 2004 when its own refinery with a capacity of 10.5 million tonnes per annum is commissioned. The company will market a little over five million tonnes of petroleum products over the next two years.

Besides talking to domestic refineries, EOL plans to import refinery products to bridge any possible gap between demand and supply, sources said.

Unlike Reliance, the company does not plan to set up storage tanks as of now. “We are in discussions with a number of companies to use the existing infrastructure on a sharing basis. Since the storage capacity in the country is already very high, there is no need to create additional storage capacity,” they added.

EOL has submitted a detailed marketing plan earlier this month to the government.

Under the plan, the company will set up 1,700 retail outlets over a period of four years. Around 250 outlets will come up this year .

These outlets, particularly those on the highways will also house facilities like motels, dhabas, ATMs, cyber cafes, spare parts shops and rest rooms.

A senior EOL official said investment in these outlets will range between Rs 50 lakh and Rs 1 crore. The company has been working on three broad models for these outlets. While some will be exclusively company-owned, others will be run by franchisees. Another model is that of land owned by someone while the infrastructure on it will be owned by the company.

   

 
 
CADILA OFFERS RS 300 A SHARE FOR GERMAN REMEDIES PIE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 18: 
Cadila Healthcare today announced an open offer to the shareholders of German Remedies Ltd (GRL) at a price of Rs 300 per share. It plans to mop up close to 45 per cent of the public shareholding, followed by GRL’s possible de-listing.

In a communication sent to exchanges today, Cadila said the offer represents a premium of 14.78 per cent on GRL’s 26-week average price of Rs 261.38 and 16.15 per cent on the four-week average of Rs 258.29. The offer provides GRL investors a chance to monetise their holding.

The offer, which is slated to open on June 6, is aimed at acquiring the entire public stake of 44.6 per cent. Zydus Cadila, along with its wholly owned subsidiary, Recon Healthcare, currently holds 55.4 per cent.

If Zydus Cadila’s post-offer stake rises above 90 per cent, the company will move an application for de-listing of German Remedies, whose shares are currently traded on the Bombay, Delhi and National stock exchanges.

Citing reasons for the decision, Pankaj Patel, chairman and managing director of Zydus Cadila, said: “In consonance with the international best practices and the group philosophy, we believe there should only be one listed firm in the group, especially in respect of companies in competing lines of business. This exercise would protect the interests of shareholders.”

Last year, Cadila emerged a surprise winner to acquire the 27.72 per cent controlling stake in GRL from Asta Medica AG (Asta) and Heller Vermogensverwaltungs GmbH (Heller). The shares were acquired at a price of Rs 650 each for Rs 148.6 crore.

At the same time, Cadila entered into an agreement to acquire, through a subsidiary, perpetual rights to five brands for a total consideration of Rs 52.6 crore. These included Deriphyllin, Paractol, Ildamen, Xipamid and Beta Xipamid. The licence for the largest brand, Deriphyllin, used to cure respiratory problems, was extended to 63 countries.

   

 
 
BILL TO SET UP PETRO REGULATOR CLEARED 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, April 18: 
The Union Cabinet today cleared a draft Bill to set up a downstream petroleum sector regulator which will license companies to market petroleum products, lay down service obligations for retail outlets and marketing service obligations for entities, besides monitoring prices of petroleum products.

The Petroleum Refining and Marketing Regulatory Board will also monitor and regulate pipeline tariffs and police industry against cartelisation or other malpractices.

The Bill also seeks to give the regulator powers to monitor and regulate tariffs on use of common facilities such as pipelines and mega-storage facilities among other things.

This assumes importance since most pipelines in the country are owned by the Gas Authority of India Ltd (Gail), and new players may have to depend upon the PSU. Since Gail has virtually a monopoly in the sector, these private sector players had been clamouring for protection from it.

The Bill will give the government the right to intervene in the market in “public interest” and “issue directions” to the regulator as and when it deems fit.

The new regulator would “protect consumer interest by fostering competition and fair trade, preventing profiteering by entities and ensuring adequate availability of petroleum products throughout the country by giving directions to companies,” the Bill states.

The board, which shall have the same powers as are vested in a civil court, would decide any dispute or matter amongst entities and consumer groups.

The draft Bill has special clauses allowing the regulator to step in and penalise petroleum firms that violate these norms.

   

 
 
MULTINATIONALS REDEEM FAITH IN INDIA 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 18: 
Most multinationals (MNCs) in India plan to expand operations here despite the problems of economic slowdown, the red tape and poor infrastructure.

According to Ficci’s 2002 survey on foreign direct investment (FDI), of the 385 MNCs polled in India, a high 51 per cent say they have lined up expansion plans.

An overwhelming 70 per cent say despite the demand slump, their capacity utilisation has ranged between 50-75 per cent — something that could have encouraged the majority of them to invest more in future.

The study says performance of these firms has been satisfactory: 61 per cent reported profits or break-evens (36 per cent announcing profits and 25 per cent break-evens). “This seems fairly positive considering most are new entrants, operating in an economic slowdown,” the survey states.

In sharp contrast, domestic investors have reported a fall in profitability in the first three quarters of 2001-2002.

A convincing 66 per cent of the MNCs surveyed find profitability in the Indian market to be “good to average”. Industrial growth rate declined to 3.3 per cent in 2001-02 from 6.3 per cent in the previous year, but, as the survey shows, MNCs are finding the going easier than local firms.

Almost 55 per cent of the respondents rated their ability to penetrate Indian markets as “good to average”. This took into account the level of competition in the market, ground-level obstacles and infrastructure facilities.

FDI inflows grew 61 per cent at $ 2.37 billion in April-November 2001 compared with $1.47 billion in the same period of 2000. The surge is attributed to opening up of other sectors like real estate and defence production to foreign investors and improved policy environment.

When it came to policy, only 11 per cent of the respondents called it good, while 52 per cent termed it average. The survey says that while things have improved from the earlier years, growth-constricting conditions such as red tape and infrastructure have worsened.

Some 52 per cent of investors rate regulations as bad; another 48 per cent felt it is average. Almost 34 per cent to 55 per cent called various infrastructure facilities — water, power, telecom and transport —problematic.

The ratio of FDI inflows to approvals has gone up to 52.8 per cent in 2000 compared with 29 per cent in 1996. However, the chamber feels the process of approval in states needs improvement with 38 per cent of the respondents calling it “bad”. The survey adds that regulatory framework is a major impediment to FDI.

   

 
 
SPANNER IN ASTRA PLAN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 18: 
The open offer by Astra Pharmaceuticals AB to shareholders of AstraZeneca Pharma India to acquire 43.50 per cent of the company for Rs 375 per share has hit a roadblock following a petition filed by a minority shareholder against the offer.

In a communication issued to the bourses today, managers to the offer DSP Merrill Lynch Ltd said: “It has not been and it will not be possible to adhere to the schedule of activities relating to the open offer for acquisition of 21,75,050 fully paid-up equity shares of Rs 10 each representing 43.50 per cent of the paid-up equity share capital of AstraZeneca Pharma India Ltd”. This, it explained, was due to an interim stay on further proceedings pursuant to the public offer, by the Kerala high court on April 8. “The stay was granted on an ex-parte basis on a petition and the affidavit in support thereof filed by a shareholder of AstraZeneca Pharma India Ltd. Astra Pharmaceuticals AB has moved the Hon’ble Kerala high court for the stay to be vacated and the matter is scheduled to be heard on April 26,” it added.

In November 2000, the parent company acquired an over 25 per cent stake held by the Hinduja-controlled IDL Industries, which was an equal joint venture partner in the company, at Rs 670 per share.

   

 
 
MAHARASHTRA CHARMS MNCS 
 
 
FROM OUR CORRESPONDENT:
 
New Delhi, April 18: 
Despite the streets of Mumbai being stalked by the D-company and Bal Thackeray and his Hindutva brigade keeping up the antics, Maharashtra continues to be the best destination among Indian states in the eyes of MNCs.

According to a Federation of Indian Chambers of Commerce and Industry (Ficci) survey conducted on foreign investment in India, Karnataka bags the second position, while Andhra Pradesh and Tamil Nadu get the third and fourth positions respectively. The survey, conducted before the Godhra carnage, ranked Gujarat a mere fifth in terms of attractiveness as a destination.

West Bengal came a poor eighth, reflecting the decline which set in on the state’s industrial scenario since the 1960s. The state was also ranked eighth in terms of FDI approvals. On the other hand, Karnataka and Haryana, both perceived as very attractive states, holding the second and sixth ranks respectively, rank fourth and eleventh respectively on the list of actual FDI approvals. Similarly, Andhra Pradesh is perceived to be the third most attractive state for FDI, but in reality it has attracted the sixth highest inflow of foreign funds.

Ficci analysts, however, pointed out that West Bengal is still ahead of states such as Uttar Pradesh and Rajasthan, which are otherwise perceived by many to be better destinations for capital inflows.

The survey also gives West Bengal full marks for carrying on policy reforms in fiscal incentives, taxation, simplification of rules and procedures and provision of quality infrastructure in select areas.

Maharashtra ranked first on the FDI approval scale, having received 17.07 per cent of the approvals between August 1991 and September 2001, while Delhi and Tamil Nadu, which were ranked second and third, received 12.28 per cent and 8.35 per cent FDI respectively.

The survey states that since research shows that 70 per cent of approvals and applications needed for setting up a unit are obtained at the state level, governments need to improve the overall investment climate in their respective states to attract funding and investment from abroad.

The survey claims that its findings clearly show a north-south divide among states, with foreign investors clearly preferring southern states as better performers with improved infrastructure and a more conducive investment climate. The rankings clearly point the southern states to be progressive and reformist.

Three of the four southern states— Tamil Nadu, Karnataka and Andhra Pradesh— remain among the top destinations for FDI as well as in MNC perceptions.

Only Kerala features among the lowest seven states in terms of MNC perceptions. Eastern states, other than West Bengal, such as Orissa, Bihar and Assam, are also rated low, with none of them figuring among the top nine states in terms of perception, even though Orissa is actually the country’s ninth largest recipient of FDI. Assam and Bihar are in fact classified in the same category as Kerala, as among the “laggards,” with poor infrastructure and complex rules and regulations for investment.

   

 
 
CALCUTTA PORT PLANS HALDIA DOCK SPIN-OFF 
 
 
BY A STAFF REPORTER
 
Calcutta, April 18: 
Calcutta Port Trust (CPT) is spinning off its Haldia Dock Complex (HDC) into a separate company.

Disclosing this here today, CPT chairman H.P. Roy said SBI Capital Market has been appointed for a feasibility study. Its recommendations will be ready in June.

“After the recommendations are made, the board of trustees will take a decision and refer it to the government for final approval,” he said.

HDC has been the most profitable dock complex of the country’s oldest port trust. Once it is corporatised, Roy said HDC would be in a position to raise money from the public by issuing shares, but will continue to be a part of CPT.

The Calcutta Dock System, which is currently under severe pressure due to a sharp fall in traffic, is not going to become a corporate entity because there is little likelihood that it can raise funds by issuing shares, Roy said.

Of the 30.39 million tonnes of cargo that CPT handled in 2001-02, Haldia Dock Complex’s share was 25.016 million tonnes. It was HDC’s performance that helped CPT to better the 30-million tonne cargo target set by the government.

Roy said HDC racked up a growth rate of 9.7 per cent last year despite the slowdown, particularly after the terrorists attacks on the World Trade Centre in September.

The economic slump notwithstanding, CPT has registered an operating surplus of Rs 196 crore and a net surplus of Rs 28 crore in the year ended March 2002. The corporatisation of Haldia Dock Complex will help CPT offer advanced facilities, helping it get more traffic. This is important in view of the competition from the Paradeep Port, which is equipped with facilities to handle petroleum oil and lubricant, besides bulk cargo.

Roy said current indications are far from encouraging as the steel and oil sectors, which constitute majority of the traffic, will be slow to recover. “Still, we are hopeful of handling 32.5 million tonnes of cargo during the current financial year,” Roy said.

CPT will invest around Rs 250 crore in its annual dredging in order to increase the draft, both at the Haldia and Calcutta ports. A capital-dredging project, which could cost over Rs 400 crore, is also in the works.

   

 
 
DVC RECAST PLAN ENVISAGES TWO PROFIT CENTRES 
 
 
BY A STAFF REPORTER
 
Calcutta, April 18: 
Damodar Valley Corporation (DVC) is planning to bifurcate generation and transmission and form two separate profit centres in tune with power sector reforms taking place in the country.

Addressing a press conference here today, DVC chairman J.C. Jetli said: “This is part of the restructuring process we are examining. The Administrative Staff College of India (ASCI) has carried out a study on the recast. Though we are not guided by the Electricity Bill 2000, we are weighing the option of floating two profit centres for distribution and transmission. A final decision will be taken in the current financial year.”

The corporation has decided not to revise tariffs in the next one-and-a-half year. “We will be able to generate cash by better performance,” he said.

DVC plans thermal projects to cater to future power demand within and outside the valley area. “We have not yet taken the full advantage of the huge coal resources in the area. It has been now decided to set up pithead power stations and generate 6,210 MW of power during the Tenth Plan. We have already come up with two mega projects – Maithon Right Bank and Maithon Left Bank, with a capacity of 1000 MW each,” he said.

The new plants will cost Rs 26,000 crore, an amount that will come from suppliers’ deferred credit of Rs 14,500 crore, internal resources of Rs 4,000 crore and by placing bonds worth Rs 7,500 crore with banks and financial institutions.

DVC is taking steps to beef up the transmission system. The Central Electricity Authority has prepared a master-plan for the development of its transmission network in the corporation’s command area. The authority has suggested addition of new sub-stations and transmission lines at 400 KV, 220 KV and 132 KV levels for a total investment of Rs 1,456.27 crore.

Besides bringing about improvement in power generation and transmission, DVC is making efforts to improve flood management and control in the area. The Central Water Commission has been enlisted to conduct a pre-feasibility study on projects that can be taken up at Bokaro, Balpahari, Bermo, in addition to exploring the possibility of dams.

Bengal says no

DVC made an offer to sell power to Bengal and Jharkhand at the rate of Rs 2.92 per unit, but the two states rejected it, Jetli said. “We have sub-stations outside the valley area, in Jamshedpur, Howrah, Purulia and Bandel. The DVC Act allows us to sell power outside the area, with the permission of state governments.”

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.91	HK $1	Rs.  6.20*
UK £1	Rs. 70.67	SW Fr 1	Rs. 29.25*
Euro	Rs. 43.47	Sing $1	Rs. 26.45*
Yen 100	Rs. 37.48	Aus $1	Rs. 25.90*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5170	Gold Std (10 gm)Rs. 5040
Gold 22 carat	Rs. 4880	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7850	Silver (Kg)	Rs. 7785
Silver portion	Rs. 7950	Silver portion	   NA

Stock Indices

Sensex		3420.94		-0.88
BSE-100		1728.59		+4.09
S&P CNX Nifty	1129.00		+3.90
Calcutta	 115.18		+0.14
Skindia GDR	 549.52		-1.22
   
 

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