Khaitans seal deal to sell Majerhat property to Jalan
Sensex rebounds with 142-pt gain
Oil stocks adequate to power war machine
No waiver for Coke IPO
United Bank bounces back with Rs 119-cr net
Templeton puts India high on investment list
Ranbaxy zooms on Glaxo patent blow
Tussle on limited mobility spills out of court arena
Hind Motors to take a Galant drive
Foreign Exchange, Bullion, Stock Indices

 
 
KHAITANS SEAL DEAL TO SELL MAJERHAT PROPERTY TO JALAN 
 
 
BY ANIEK PAUL
 
Calcutta, May 24: 
Williamson Magor & Co is selling a 15-bigha property at Majherhat to real estate baron Mahendra Jalan.

The Khaitans of Williamson Magor and Jalan have reached an agreement on the sale of the property, but the deal has not been consummated yet for want of approvals from the government and financial institutions.

Though both Deepak Khaitan and Mahendra Jalan confirmed that the deal had been struck, they refused to divulge the consideration for the sale. Real estate brokers say this is one of the biggest ever property deals in the city in recent times. They say Jalan will be paying over Rs 20 crore to acquire the property.

“To put this deal in perspective, one should compare it with Reliance’s acquisition of the erstwhile ICI House on Chowringhee. Reliance paid Rs 21 crore for it,” a real estate broker said. While Reliance turned it into its regional headquarters, Jalan is expected to build a residential complex on the plot.

The plot has been used for decades by a number of companies owned by the Williamson Magor group. A factory of Macneill Engineering Ltd now stands on the plot, but it has been abandoned and its operations moved to Bhasa on the outskirts of the city. The property belonged to Macneill and Barry till it merged with the Williamson Magor group.

The Khaitans had mortgaged the property to ICICI—their principal lender. “We will have to vacate the mortgage and seek ICICI’s clearance for the sale,” a senior group official said. Under the provisions of the Urban Land Ceiling Act, the group will also have to obtain the state government’s approval for the sale.

“Besides, a part of the plot on which the factory stands is owned by the Calcutta Port Trust. It was leased out to us and we will have to obtain CPT’s clearance too to transfer the property to its new owner,” the official added.

The plot was recently vacated. Even after the factory was abandoned, a group of 25 workers refused to leave it. A solution to the impasse was recently worked out, an official said.

The Khaitans hold 46.8 per cent in Williamson Magor & Co, while the Magors of England hold 26.89 per cent. The Khaitans and Magors parted ways two years ago dissolving a decades-old partnership.

The Khaitans have been selling their non-core assets including some tea gardens and investments, to reduce their debt burden.

They recently sold their shares in the landmark multiplex on Camac Street, which they had promoted with associates. Another property in north Calcutta has been put on the block.

The Khaitans have also sold a 10.27-acre plot in Bhopal — which they inherited from Union Carbide — a handful of apartments in Mumbai, and a plot in Delhi.

   

 
 
SENSEX REBOUNDS WITH 142-PT GAIN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 24: 
The Prime Minister said he could not see war clouds in the sky. He may or may not be adept at weather forecasts, but Dalal Street thought it was good enough to breathe easy and get on with business.

The Bombay Stock Exchange (BSE) sensex beat fear and an eight-day spell of losses to end with a 142-point gain as investors woke up to an Atal Bihari Vajpayee who appeared to be soothing the jangled war nerves.

Market watchers said the receding fears of a conflict, and the fact that a correction was long overdue after eight days of clobbering, led to the sensex leap, believed to be sharpest single-day gain in 15 months.

Nothing could have been more dramatic: a plunge on Thursday as the market heard the Prime Minister exhorting forces on the Kashmir frontline to brace for a “decisive war” and a spike the next day when he conjures up an imagery with words that sound less apocalyptic.

The Prime Minister’s remarks also drove up shares in Pakistan, where the Karachi stock exchange ended higher.

Analysts said sentiment was also bolstered by reports that the government would press ahead with PSU disinvestment, and the knowledge that Indian Oil will sell its holdings in ONGC and GAIL over the next few months.

The Reliance group companies, which had taken it on their chin in the past few weeks, were the big gainers. Investors, concerned that the company’s plants near the Pakistan border are at risk, took comfort from the PM’s assessment. Reliance Industries gained by more than 7 per cent to end at Rs 271.60, while Reliance Petroleum jumped 5.5 per cent to Rs 23.95.

The volume of business swelled to Rs 1497.62 crore from Rs 1053.41 on Thursday. Satyam Computer was the most actively traded share, notching up the largest turnover.

Rupee rallies

The rupee closed at 48.98/99 against the dollar, sharply higher from its previous close of 49.04/05. Dealers attributed the turnaround to banks which wound down their dollar positions as the war fears waned. The six-month forward premia finished at 6.34 per cent, against 6.76 per cent.

Safe-haven gold was sent to its highest level in more than 2-1/2 years on Friday, lifted by fears of war between India and Pakistan and renewed violence in West Asia. Spot gold ended in London at $ 321.50/322.25 an ounce, up from its previous closing European level of $ 317.40/317.90.

   

 
 
OIL STOCKS ADEQUATE TO POWER WAR MACHINE 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, May 24: 
The government today announced that it has stockpiled enough oil reserves to take care of a war with Pakistan.

“We have enough supplies to face any eventuality. There would not be any shortages,” petroleum minister Ram Naik told newspersons here today. Naik said India had enough to supply the needs of the defence forces, railways and the normal consuming public for 60 days, without fresh imports or production.

The government had started building up oil reserves at various points in case war or some other unforeseen situation disrupts oil supplies either from abroad or even our own deep sea oil wells. Last year the government had prepared a detailed action plan to distribute oil products from local reserve pools in case war, floods, earthquakes or other calamities create a disruption in the normal road and rail transportation system for petrol products.

This plan as well as a formal plan to create a national strategic reserve on the lines of the huge strategic reserves which the US maintains is likely to be placed before the Cabinet soon for a formal clearance. In fact, Naik told reporters that he would visit the US next month to study the strategic oil reserves concept developed by the Americans to meet any eventuality.

Official sources, however, confirmed that the ground work on building this reserve and activating the distress distribution plan has already started ahead of any formal Cabinet clearance.

Reserve points have been identified and stocks have already been moved so that even if rail service is disrupted due to bombing or due to diversion of rolling stock for military use, there would not be any oil shortage in any part of the country.

Sources said India has also already diversified its sources of oil supplies, not limiting itself to imports from West Asia alone as sea routes from these oil producing nations could be affected due to war.

   

 
 
NO WAIVER FOR COKE IPO 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 24: 
The Foreign Investment Promotion Board (FIPB) has rejected Coca-Cola India’s request that it be exempted from the rule that requires it to divest 49 per cent in Hindustan Coca-Cola Beverages Private (HCCB), its downstream bottling venture, to the Indian public. However, a company spokesperson said he had no word from the government.

Coca-Cola had made the same plea in October last year, seeking a waiver or deferment of the divestment clause. The plea was turned down on the ground that conditions agreed to at the time of entry must be adhered to. It is believed that the fresh application from the cola giant was referred to a core group of the board.

“Coca Cola had sent in a fresh application more than a month back to delete the divestment clause on the grounds of precedents,” the coke spokesperson said.

The company has argued that its agreement with the government pre-dates the FDI policy in food processing, which allows 100 per cent investment through the automatic route now.

Though the application was taken up again under the rule that a case could be reconsidered, provided the applicant cited new developments, the government is known to have taken a stand that there has been no policy change on conditions that require a stake selloff.

Coca-Cola may either opt for a public offer or private placement of equity to sell its shares in Hindustan Coca-Cola. In the past, the company said it would like to consider selling shares in its bottlers if it must comply with the divestment clause. Some of its bottlers, like the Ladhanis, had shown interest in the plan.

Coke had maintained in its application sent to FIPB in October that the accumulated losses of the company were estimated at a little over Rs 2,100 crore at the end of March 31, 2001. It cited a Sebi guidelines that mandate only firms with profits for at least three of the immediate preceding five years can launch a public issue.

Arch-rival Pepsi, which entered India in 1989, has no divestment clause in its agreement.

   

 
 
UNITED BANK BOUNCES BACK WITH RS 119-CR NET 
 
 
BY A STAFF REPORTER
 
Calcutta, May 24: 
Vindicating finance minister Yashwant Sinha’s assertion that United Bank of India had turned the corner, the Calcutta-based bank today unveiled a Rs 119-crore net profit for financial year 2001-02 — Rs 100 crore higher than the previous year— even after providing extensively for its past dues and losses.

The bank had accumulated losses of Rs 1,547 crore, including deferred liabilities, in the beginning of 2001-02. During the year, it provided Rs 307 crore to reduce its past losses to Rs 1,240 crore. It has also increased its capital adequacy ratio to 12 per cent from 10.4 per cent.

United Bank has been speaking of raising capital from the market, but the bank’s chairman, Madhukar, today said: “We will not go to the market until next year. We intend to repeat this performance before seeking investors’ money. We will receive a better valuation if we can prove this is no flash-in-the-pan performance.”

Much of the profit this year, however, came from treasury operations. The bank earned Rs 281 crore from trading in securities as against Rs 51 crore in 2000-01. “It is unlikely that we will be able to maintain such a high level of income from treasury operations next year, but we aim to compensate it by higher profits from core operations,” Madhukar said.

The bank posted an operating profit of Rs 237 crore—about 73 per cent higher than the previous year. It would have been in the region of Rs 510 crore had it not provided for dues and losses.

During the year, the bank reduced its net non-performing assets by recovering close to Rs 300 crore from borrowers. The bank’s net NPA stands at 7.9 per cent now, and gross NPA, at 16 per cent or Rs 1,216 crore.

Going forward, the bank sees retail lending as one of its key drivers of growth. Madhukar said the bank would be re-engineering its entire product portfolio to become more aggressive in the retail segment.

“We have managed to reduce our cost of deposit by 50 basis points to 7.5 per cent, and increase the spread on interest to 3.1 per cent. This encourages us to rework our products,” he said.

   

 
 
TEMPLETON PUTS INDIA HIGH ON INVESTMENT LIST 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 24: 
Franklin Templeton Investments, the leading asset management firm, sees India as a destination with a huge investment potential for growth. It is considering India as an outsourcing base for its Asian business initially and later for its global operations.

“We are still evaluating whether we should outsource or do captive work. Our plans for India are very ambitious,” Vijay Advani, managing director for Asia said.

The fund has set a scorching growth pace in the past two years, with assets under management up 142 per cent from Rs 1,702 crore in April 31, 2000, to over Rs 4,117 crore on May 17, 2002.

Its growth through the inorganic route will get an impetus when the Indian arm of Franklin Templeton Asset Management completes its acquisition of ITI Pioneer by June, a move that will make it the the largest private-sector asset manager in the country. The acquisition of Pioneer ITI for about $ 47-52 million (close to Rs 250 crore) will double Templeton’s local assets to around Rs 8,000 crore, Advani said. “Our strength is in the value style of investment. Pioneer ITI specialises in the growth style. We can offer three sets of complementary products after the acquisition of Pioneer ITI are products based on the value investing platform, fixed income and Pioneer’s growth oriented products for investors with a short term objective.”

He said the acquisition would help Templeton tap investors seeking long-term returns as well as those looking to benefit from shorter-term trends. Templeton is known for its fixed-income funds, while Pioneer has a range of popular equity plans.

Striking a bullish note, Advani said Templeton was open to more acquisitions in India, where it sees mutual fund assets growing in double digits for several years.

“We will not acquire bulk assets. We are looking for products that will complement our own. If there were a fund house that specialised in sector funds, we would be interested.”

Charles Johnson, president of Franklin Templeton International, said the investment potential in India is massive and along with Pioneer’s comproducts, it was set to capture a huge market.

   

 
 
RANBAXY ZOOMS ON GLAXO PATENT BLOW 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 24: 
Ranbaxy Laboratories’ share zoomed today following reports that a US Federal Court has quashed GlaxoSmithKline’s patent on antibiotic Augmentin.

Ranbaxy is among the companies that plan to market a generic version of the drug. The drug is a compound of amoxycillin, a penicillin and clavulanic acid that prevents bacteria from turning resistant to penicillin. As bullish investors made a beeline for the stock sensing huge gains if Ranbaxy markets the antibiotic’s generic version, the share finished with a gain of over 9.50 per cent. Opening at Rs 782.65, it peaked at Rs 841.10, before finishing at Rs 839.10, up from Rs 74.15 on Thursday.

In Europe, shares of GlaxoSmithKline sank 8.7 per cent to hit a two-year low after the US court order paved the way for cheap, copycat versions to steal sales as early as the end of June.

While market watchers were buoyed by the developments, analysts and sources close to Ranbaxy were more cautious. Sources told The Telegraph that even though a US court has cancelled Glaxo’s patent on the drug, it is still too early to rejoice as Ranbaxy is yet to obtain approval for its version of the drug from FDA. Moreover, Glaxo is expected to appeal against the ruling.

Reacting to today’s court decision, Glaxo said though patents on the drug expire in June, July and December 2002, it insisted that they were valid. It gave enough indication that it would contest the decree in the US Federal District Court in the eastern district of Virginia.

Many companies, including Geneva Pharmaceuticals, an affiliate of Novartis AG, Israel-based Teva Pharmaceutical Industries and Ranbaxy Laboratories had filed a case to get Glaxo’s patent on Augmentin revoked so that they could launch generic versions. Geneva, many analysts say, has received final approval from the FDA for its generic version of the drug, in various dosage forms. Glaxo is reported to be considering appeals against previous rulings from the same court on Augmentin patents expiring in 2017 and 2018.

Augmentin has annual sales of $ 2 billion. Glaxo says its EPS growth would fall to around 10 per cent in 2002 and to the high single digit in 2003 if generic versions of the drug are launched before the appeal is resolved.

Earlier this month, Ranbaxy had secured final approvals from the FDA to market the generic version of Roche’s Versed syrup, used as children’s sedative. The approval was seen as yet another achievement for the research-oriented pharmaceutical major, particularly in the US, where it has already attained a critical mass. Turnover from that country is close to $ 113 million.

The Delhi-based company has identified six core markets, including India, the US, China UK, Germany and Brazil. These markets are expected to account for 80 per cent of the business over the next three years. Ranbaxy, aggressively looking at the generic market, is optimistic about its success as blockbuster patents of $ 60 billion are expected to expire in the next five to six years.

   

 
 
TUSSLE ON LIMITED MOBILITY SPILLS OUT OF COURT ARENA 
 
 
FROM M. RAJENDRAN
 
New Delhi, May 24: 
The battle royale on limited mobility has spilled out of court, into competitive research. Cellular operators and fixed-line phone firms are churning out reports and surveys to buttress their points.

Even as the issue waits before the Supreme court, the private fixed line operators have cited two reports — the Centre for Market research and Social Development and PA Consulting — to reinforce their case.

PA Consulting points to the irony in claims that limited mobility based on wireless-in-local-loop (WiLL) technology is an affordable service. On an average, it says, the service is about double the cost of a fixed phone in urban areas and almost six times more expensive in villages. Its report says at this tariff structure, the service will not improve the country’s tele-density.

Fixed line operators have raised this point with the Telecom Regulatory Authority of India (Trai) and are expected to intensify their campaign to offer WiLL-based limited mobility. They will also push for lower rentals.

“Fixed-line operators have approached us, we are examining its merits but it is difficult to accept an argument that requires fixed operators to be allowed to offer flexible tariffs and change monthly rentals to ensure affordability and increase the level of tele-density. We have yet to take a decision on this, but we will soon make up our minds on it,” a senior Trai official said.

While recommending that this service should go forward, the regulator allowed call charges to be subsidised in the same way as fixed calls, but insisted that since there was a premium attached to mobility, the monthly rental for the service should be cost based.

“PA Consulting’s report on WiLL services and its pricing appears to be a curious mixture of right facts and wrong conclusions,” said T.V Ramachandran, director general Cellular Operators Association of India (Coai).

Trai fixed cost-based rentals in May 2001 after taking into account the cost structure of fixed operators. A look at the explanatory memorandum of Trai Tariff Order shows that the average monthly rental in the best circumstances is estimated at Rs 475 and in worst circumstances at Rs 608. In line with this calculation, Trai fixed the monthly rental for WiLL services at a minimum of Rs 450 and a maximum of Rs 550.

According to the report, the price of the service is not the result of free-market dynamics, but rather a consequence of the host of regulatory and policy decisions.

Cellular operators are marshalling a report prepared by consultant SS.KAI that was submitted to the Telecom Dispute Settlement Appellate Tribunal (TDSAT).

   

 
 
HIND MOTORS TO TAKE A GALANT DRIVE 
 
 
FROM SHASHWATI GHOSH
 
New Delhi, May 24: 
Hindustan Motors plans to roll out a new premium segment car—Galant—from the Mitsubishi stable.

It also plans to equip the Lancer with a more powerful heart —a 1.8 litre engine —along with an automatic transmission system to make the car even more powerful. The move comes after Hindustan Motors’ venture with Mitsubishi broke even.

Speaking to The Telegraph, HM’s managing director B. K. Chaturvedi said, “We have done market research on launching the Galant here. Though nothing has been finalised, the premium segment is fast growing now. However, all the players in the segment operate through completely knocked down (CKD) kits. So to bring in such a model we will need more planning.”

Galant, a premium segment car, will be directly pitted against the Ford Mondeo, Honda Accord, Hyundai Sonata and a few offerings from DaimlerChrysler.

“Though we have made an overall loss due to the inefficiency of our Uttarpara car plant, this particular joint venture has been good for us. By itself, it is paying for our current round of investments in building the Pajero GLS and GL at our Chennai plant. With the Pajero, we can only increase the value of the brand,” said Chaturvedi.

Lancer is the best selling model in the mid-size category (4001-4500 mm) according to figures released by the Society of Indian Automobile Manufacturers. It sold 1,484 cars in April out of a total 6,569 cars sold in the segment, closely followed by Hyundai Accent 1,425 cars and Ford Ikon at 1,303 cars.

“HM, though well known, is perceived as a weak name at the moment. We have broken the costly image of Lancer and now want to offer value for money by giving customers the maximum power possible,” Chaturvedi said.

Though he declined to give the price difference between the 1.5 litre and the new 1.8 litre engines, market sources said it will be between Rs 30,000-35,000.

Lancer is currently available in the basic model GL, GLX, SLX, SFX (sports) and LE (the super luxury version). All the five variants are available in both 1.5 L petrol engines and 2 L diesel engine at present but only in manual transmission.

To make the Lancer really a unique brand, where even the price points of the variants will not be clashing with each other, there are plans to phase out the SLX—the previous luxury brand—as the new LE is eating into its share.

“The LE is a good Rs 80,000 costlier, but when people go for luxury cars, they don’t quibble about such differences. However, it is this price differential that is still helping sell SLX. If the number of SLX sold really drops beyond a level (25-30) then we will be positively looking at phasing out the model altogether,” the automaker said.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.99	HK $1	Rs.  6.20*
UK £1	Rs. 71.14	SW Fr 1	Rs. 30.50*
Euro	Rs. 45.02	Sing $1	Rs. 26.90*
Yen 100	Rs. 39.12	Aus $1	Rs. 26.70*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5460	Gold Std (10 gm)Rs. 5315
Gold 22 carat	Rs. 5155	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 8375	Silver (Kg)	Rs. 8240
Silver portion	Rs. 8475	Silver portion	   NA

Stock Indices

Sensex		3255.62		+141.57
BSE-100		1648.16		+68.40
S&P CNX Nifty	1067.00		+40.25
Calcutta	 114.58		+ 5.62
Skindia GDR	   NA		   —
   
 

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