Reliance bags IPCL
RBI hastens liquidity flow
New-look Siena cheaper
Oriental Bank net jumps 58%
Eicher earns cash profit

 
 
RELIANCE BAGS IPCL 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 18: 
India’s largest petrochemical company Reliance Industries today won a keenly contested race for acquiring 26 per cent government stake in Indian Petrochemicals Corporation Ltd (IPCL), quoting a price of Rs 1490.84 crore.

Reliance Industries bid Rs 231 per share for over 6.45 crore equity shares (26 per cent) to win India’s second largest petrochemical company, disinvestment minister Arun Shourie told reporters after a meeting of the Cabinet Committee on Disinvestment (CCD) here.

The other two companies in fray—Indian Oil Corporation (IOC) and Nirma—bid lower than the Rs 845.5 crore (Rs 131 per share) reserve price fixed by IPCL disinvestment advisor Warburg.

State-run refiner IOC put Rs 826 crore at Rs 128 per share while detergent maker Nirma bid Rs 711 crore at Rs 110 per share, Shourie said.

With the acquisition of 26 per cent government holding in IPCL, Reliance now joins the league of top global petrochemical firms like Dow Chemicals and BP Amoco and stands to command 80 per cent of the Rs 30,000-crore petrochemicals business in the country.

Coming as it does after Reliance Industries’ failure to acquire VSNL and IBP, acquisition of India’s second largest petrochemical company would provide a major fillip to RIL’s corporate image and core business of petrochemicals.

IPCL is one of the leading integrated petrochemical players in India that manufactures petrochemical products (polymers, fibre and fibre intermediates and chemicals) using hydrocarbon feed stocks naphtha and natural gas.

The polymer group of products accounts for 66 per cent of IPCL’s business. Fibre and fibre intermediates contribute 12 per cent and chemicals account for 22 per cent.

The combined production of major merchant products from the three IPCL complexes at Vadodara, Nagothane and Gandhar was 13.71 lakh tonnes in 2001-02 as against 11.76 lakh tonnes achieved in the previous year, registering an overall growth of 17 per cent.

IPCL, which had reserves and surplus of Rs 2946.1 crore as on March 31, 2001, posted a net profit of Rs 56 crore on sales of Rs 3370.9 crore during the first nine months of 2001-02.

The government, which presently has 59.95 per cent equity in IPCL, has decided to offload 51 per cent stake in two phases. It would transfer management control to Reliance for 26 per cent stake initially and the new partner would have the right of refusal over the remaining 25 per cent equity.

Regarding GE Plastics India Limited where IPCL held a 50 per cent stake, the CCD decided to sell off IPCL’s share to GE itself. “IPCL will earn Rs 23.63 crore from the sale of this 50 per cent stake to GE and another Rs 25.40 crore from property sale to GE. Thus the total earning for IPCL will be Rs 49.03 crore,” disinvestment secretary Pradip Baijal said. In another decision regarding National Fertiliser, it was decided to call for the bids after the settlement of urea price policy.

IOC unfazed

Indian Oil today put up a brave front on losing IPCL to Reliance Industries saying the temporary set-back would not affect its plans to enter petrochemicals business.

Senior IOC officials said the company has detailed plans to foray into petrochemicals business, including construction of a Rs 4,200-crore petrochem complex at Panipat and acquisition of Haldia Petrochemicals Ltd.

   

 
 
RBI HASTENS LIQUIDITY FLOW 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 18: 
The Reserve Bank of India (RBI) today lent a helping hand to the liquidity-strapped money market by advancing the date of reduction in cash reserve ratio (CRR) to June 1. Accordingly, CRR will now be reduced by half a percentage point to 5 per cent from this date. This 50 basis points reduction will inject an additional Rs 6,000 crore into the banking system.

In the monetary and credit policy announced in late April, RBI governor Bimal Jalan had proposed to reduce the CRR—a proportion of deposits which banks’ have to compulsorily maintain with the apex bank—to 5 per cent from the fortnight beginning June 15.

However, Jalan had then pointed out if the situation demands the RBI may advance the date of reduction in CRR.

The RBI today said that “on a review of the present liquidity situation”, it has decided to advance the date for reduction in CRR. “Banks will have to maintain CRR at 5 per cent as against the present level of 5.5 per cent effective next reporting fortnight beginning June 1,” it noted.

The development, however, did not come as a surprise to the domestic bond market which was expecting an advancement of the date in view of the tight liquidity conditions over the past few days. This follows the huge borrowing programme of the government leading to hardening of gilt yields.

Speaking to The Telegraph, N. Balasubramanian, head, global markets, ICICI Bank, said that the RBI move is welcome even as it does not come as a surprise to the market which was expecting liquidity signals to come from the apex bank.

“The RBI move signals that it is committed to providing liquidity. It is usually observed that in volatile conditions, regulators absorb liquidity from the market. This move therefore by the central bank is positive,” he added.

Analysts here added that the underlying trend in the bond market remained weak due to the situation at the international border and anxieties over the future course of action of the Union government.

According to market experts, the picture will be clearer early next week.

“If the government only stops at asking diplomats of Pakistan to leave, then there would be little negative reaction on the bond markets,” an analyst said. However, in the event of any drastic fall in government securities prices, it is expected that the central bank will intervene through its open market operations (OMO).

   

 
 
NEW-LOOK SIENA CHEAPER 
 
 
BY A STAFF REPORTER
 
Calcutta, May 18: 
The premium segment of the passenger car market has a bold new entrant—a competitively priced Fiat Siena, which sports an improved look. The plain vanilla 1,200cc model of the new Siena costs Rs 1 lakh less than its predecessor.

Thanks to a higher level of localisation of inputs — 85 per cent now compared with about 35 per cent earlier—Fiat managed the dramatic price cut. Four new models of the Siena, priced between Rs 5 lakh and Rs 6.8 lakh (ex-showroom), were launched here today. Three of them use 1,600cc engines.

The Siena was remodelled by Giorgio Giugiaro who shot to fame internationally for his design of the Palio. Besides the designer, much of the inputs of the two cars are common, experts say.

The highly successful Palio—available in 1,200cc and 1,600cc models—scripted Fiat’s turnaround story in India. Last month, the company sold 4,203 cars compared with 501 in April 2001. From a 1.3 per cent share of monthly sales in August last—when the Palio was launched—Fiat claims to have cornered a 10 per cent share last month.

   

 
 
ORIENTAL BANK NET JUMPS 58% 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 18: 
The Oriental Bank of Commerce has clocked business worth Rs 42,646 crore for the financial year 2001-02 and saw its net profit jump 58 per cent to Rs 320.55 crore from Rs 202 crore in the previous year.

The bank registered a 71.7 per cent increase in gross profit to Rs 917 crore from Rs 534 crore in the previous financial year. OBC chairman and managing director B.D. Narang said the bank had posted a deposit growth of 18.67 per cent. Deposits rose to Rs 28,488 crore from Rs 24,680 crore in the previous year.

The average cost of deposit has come down from 8.4 per cent in 2000-01 to 7.7 per cent in 2001-02. Gross advances rose 28.7 per cent to Rs 14,486 crore from Rs 11,255 crore. Priority sector advances of the bank stood at 40.73 per cent of the net credit. Narang said, “This year we will focus on small and medium term business and service sector.”

   

 
 
EICHER EARNS CASH PROFIT 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 18: 
Eicher Limited, part of the Rs 1200-crore Eicher Group, has reported a cash profit of Rs 16 crore during the financial year ended March 31. Last year, it had a cash loss of Rs 21.2 crore. Gross sales increased by 9.9 per cent to Rs 634. 6 crore from Rs 577.4 crore in the previous year, while net sales were up 11.4 per cent at Rs 550.5 crore from Rs 494 crore in the previous year.

The company has made a depreciation provision of Rs 23.6 crore against Rs 21.2 crore in the previous year.

It provided Rs 24.8 crore for interest against against Rs 23.9 crore in the previous year. As a result, there was an 82 per cent reduction in the loss (before amortisation of the VRS costs) to Rs 7.7 crore from Rs 42.5 crore in the previous year.

A charge of Rs 9.5 crore has been made towards expenditure on VRS against Rs 9 crore in the previous year. Further, deferred tax credit of Rs 6.2 crore for the year has been recognised in the profit and loss account for the year. As a result, the net loss after tax for the year is Rs 11 crore compared with Rs 51.5 crore in the previous year.

S. Sandilya, chairman and CEO of the Eicher group, said, “We pursued top line growth through introduction of new products in high growth segments, enhancement of our distribution network, aggressive marketing and focus on cost reduction covering manpower, materials, overheads and working capital costs. This strategy helped us achieve growth of over 10 per cent in sales income and in enhancing the operating margin as percentage to net sales from 1 per cent to 7 per cent.”

Even as the tractor industry continued to witness a slowdown with 12.1 per cent drop in volumes, Eicher Tractors reported a growth of 5.3 per cent by selling 19,026 tractors compared with 18,063 units in the previous year.

Royal Enfield sold 24,384 motorcycles as against 21,874 in the previous year, thus recording a volume growth of 12 per cent. In value terms, the turnover amounted to Rs 144 crore representing a growth of 16 per cent over the previous year and reflecting higher per unit realisation.

Siddhartha Lal, chief executive of Royal Enfield said, “The focus on exports led to a growth of 45 per cent in the year to 1616 motorcycles from 1127 in the previous year.”

   
 

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