Tatas blink in VSNL showdown
It’s a long haul for Tata Tele
Govt pledges funds prop to Unit Trust
Dual electricity rates mooted in new policy
Pfizer sues Ranbaxy for patent infringement
Have a ball while the promos kick off
ATM snags spark panic pullout at Global Trust
Dr Reddy’s files for blockbuster Pfizer drug
Srei net profit up 31.6%
Foreign Exchange, Bullion, Stock Indices

 
 
TATAS BLINK IN VSNL SHOWDOWN 
 
 
FROM M. RAJENDRAN
 
New Delhi June 6: 
The Tatas today drew in their horns in the spat with the government, indicating that they would spread the planned investment by Videsh Sanchar Nigam (VSNL) in Tata Teleservices over eight to ten years, instead of four as proposed earlier.

Another olive branch came in the form of a willingness to incorporate a clause in the deal that would make an annual review of investments mandatory. “We held discussions with the VSNL board and the proposal has been appreciated. Though we are yet to get a final nod, we are encouraged by statements from Tatas that they are willing to end the impasse,” communications ministry sources said.

If these proposals are indeed accepted by the Tatas, it will be a capitulation of sorts by the Rs 47,000-crore group. Haggling harder, the Centre has also pressed for a government nominee to be inducted into the VSNL sub-committee that would oversee investment plans.

At the same time, the government said it would prefer to resolve the issue of VSNL’s funding for Tata Teleservices through discussions. Legal options would be explored only if negotiations on drafts — which have been prepared by government lawyers — falter.

“The drafts have been prepared. In case talks with with the Tatas fail, we can approach the courts. I am sure that Tatas’ lawyers have also prepared their case. This is nothing new and is a measure that all companies adopt as a contingency measure. No one waits for the talks to fail,” said a senior government lawyer.

Meanwhile, the Delhi high court is likely to hear on Friday a public interest litigation contesting VSNL’s decision to invest in Tata Tele. The suit, filed by the Forum for Justice and Peace through its secretary, R. K. Maheswari, accuses the government of selling profitable PSUs at throw-away prices under the garb of privatisation.

   

 
 
IT’S A LONG HAUL FOR TATA TELE 
 
 
FROM SATISH JOHN
 
Mumbai, June 6: 
For all the heat and dust raised over it, Tata Teleservices’ (TTL) progress to a basic operator of prominence will be long, arduous and expensive.

Pitted against the might of BSNL, MTNL and other ambitious upstarts, the company will have to go a long way before it tastes profit. It faces the stupendous task of building up network in six states at an investment of Rs 8,247 crore, much of which would have to be poured over years.

TTL, an unlisted company, reported losses that overwhelmed its income last year. It was in the red by with a figure of Rs 148.04 crore on sales of Rs 86.3 crore in 2000-2001. On March 31, 2001, the company had a net-worth of Rs 167.84 crore and total assets worth Rs 727.20 crore.

The company intends to fund projects with an equity component of Rs 4,325 crore and debts of Rs 3,922 crore. In the equity, the Tatas are expected to chip in with Rs 2,552 crore over a period of four years, while VSNL will invest Rs 1,200 crore. Other non-Tata entities are expected to sink in Rs 573 crore.

That VSNL’s planned investment, to be made at par, has a long gestation period is something analysts tracking the industry are not comfortable with. The large amount of money required in the industry will discourage many aspirants — it is apparent since there are few private sector players in the fray.

VSNL insists it is a strategic investment, not an effort at asset stripping. It also trumpets the fact Tata Teleservices will cover three of the four metros and seven of the eight big cities. More important, the states in which it has secured licences are high-growth regions.

The company is currently providing basic services in Andhra Pradesh, the licence for which was bagged in 1997 and services were launched in March 1999. In Andhra, it is adding 10,000 subscribers every month. It has covered 10 cities with 1.5 lakh customers and aims to add an additional 1.5 lakh subscribers. It has also acquired licences for Delhi, Gujarat, Tamil Nadu, Karnataka and Maharashtra.

TTL has, however, claimed that its earnings before interest, depreciation, tax, depreciation and amortisation is positive month-on-month, from March 2001. “TTL’s financial position reflects the start-up nature of its operations. The financial performance is likely to improve over the medium term as it builds a critical mass of customers,” Crisil said in a report.

   

 
 
GOVT PLEDGES FUNDS PROP TO UNIT TRUST 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, June 6: 
Unit Trust of India (UTI) today got the assurance from the Union finance ministry that the latter will chip in with some funds to help the mutual fund major meet its immediate payout needs.

Though the exact modalities of government’s fund infusion is yet to be worked out, top finance ministry officials said it has been decided in principle that the ministry will chip in along with the sponsors—banks and financial institutions—of UTI.

The mutual fund major is in dire need of funds to service the various assured monthly income schemes that are maturing by the end of this month. UTI does not have enough money in its development reserves to fund this payout and, hence, it has to seek the help of its sponsors and the government.

The in-principle decision of the government to bail out UTI was taken at a meeting between finance minister Yashwant Sinha and UTI chairman M. Damodaran held today.

Finance ministry officials said: “The fine print of the plan could not be agreed upon today. We have asked them to re-work certain figures. But yes, the in-principle decision to help if the sponsors funds’ fall short is there, we have accepted that.”

Two monthly income schemes floated by the UTI will come up for redemption this month-end and the mutual fund major faces a combined shortfall of Rs 1,050 crore on this account. Its liquid development reserves are estimated at about Rs 750 crore. In all UTI may need another Rs 1,000-1,500 crore to service other schemes coming up for redemption between now and 2004.

The government had earlier tried to avoid giving fresh funds to UTI by simply trying to rope in more sponsors for the mutual fund major who would instead infuse money by buying fresh equity. Besides IDBI and LIC who are UTI’s promoters, the government has managed to convince certain state-run banks to drum up monetary support.

But keeping in mind the long-term needs of UTI and realising that short-term packages may not really put the mutual fund major back on its feet, the government has decided to chip in with funds. UTI is already trying to bridge the gap between its revenues and pay-out needs by selling certain shares and other assets. It sold off 2.11 lakh shares in Bells Control even today.

Ministry officials said, UTI’s problem is that these are all assured income schemes promising fixed rates of return varying between 10.5 to 14 per cent, whereas the real value of these schemes have been falling.

   

 
 
DUAL ELECTRICITY RATES MOOTED IN NEW POLICY 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, June 6: 
The Union power ministry has proposed differential rates for peak and off-peak hours in the new tariff policy that will be announced shortly.

The proposal was mooted at a recent meeting chaired by Union power minister Suresh Prabhu. “The formula has been worked out according to usage of power by the consumers,” sources said. The peak period tariff would be higher than the off-peak tariff.

It had also been proposed at the meeting that the tariff will be structured so as to reflect the actual normative cost. The new policy will rationalise power tariff by reducing cross subsidies.

At present high-end and industrial consumers bear the brunt of subsidy provided to the weaker sections of society and the agricultural sector.

“This has been a much talked about subject. The regulatory commissions have already considered this matter. The new tariffs announced in different states show a trend in that direction,” sources said.

The government will also restrict subsidies to capital grants for network extension to provide access to all villages, power supply to below-poverty-line families, small and marginal farmers and farmers in drought prone areas. In agriculture, the government will access cheap power from older plants. The hike in tariff will be directly linked to the hike in input costs like coal, sources said.

The cost of coal is a critical element in the cost of power from thermal stations. To control these costs, a regulatory commission for determining coal prices may be set up.

The new policy would help state regulators to fix tariffs and state electricity boards to devise strategies to rationalise power distribution. It would also remove the problem of multiple tariffs in various states.

According to sources, the normative 60:40 thermal-hydro mix would not be attainable even with the thrust on full development of the hydro potential.

Peaking power stations would, therefore, need to be developed based on gas and pump storage at hydro sites. Both the options would become viable with the introduction of a differential tariff between peak and off-peak hours.

   

 
 
PFIZER SUES RANBAXY FOR PATENT INFRINGEMENT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 6: 
Pfizer Inc has sued Ranbaxy Laboratories Ltd for alleged infringement of its patent on the anti-fungal drug Diflucan. Pfizer filed the suit last month in a New Jersey court. The company was responding to Ranbaxy’s application seeking approval from the US Food and Drug Administration (FDA) to sell the generic version of Diflucan—Fluconazole.

Speaking to The Telegraph, a company spokesperson said they have challenged Pfizer’s patent on the drug and that the “patent is invalid” . The drug has a huge potential as it clocked sales of around $ 1 billion, he added.

According to existing US regulations, the first company to file for generic drug approvals and successfully challenge a patent on a branded drug would get six months of exclusive marketing rights of this drug.

Novopharm, a Canadian company had unsuccessfully challenged Pfizer’s patent on this drug. Industry circles pointed out that such suits by original patent holders are common.

Ranbaxy’s move on this drug forms part of its aggressive strategy in tapping the large generic potential in US, where it has already recorded sales of over $ 100 million. The company has so far obtained 44 cumulative approvals for abbreviated new drug applications (ANDAs) and in the current year, it has obtained clearance for 6 drugs from the US authorities.

A major blockbuster among these six includes antibiotic ceferoxime axetil, which according to Ranbaxy officials holds huge potential. The company had earlier revealed that it would file close to 15 ANDA applications annually.

In March, Ranbaxy secured final approvals from the US FDA to market the generic version of Roche’s Versed syrup. The company’s interests in this market is carried through Ranbaxy Pharmaceuticals Inc, a subsidiary.

   

 
 
HAVE A BALL WHILE THE PROMOS KICK OFF 
 
 
FROM RAJA GHOSHAL.
 
New Delhi, June 6: 
The World Cup being as much a marketing event as a sports carnival, companies like Coke, Pepsi, Samsung, AirTel, Gillette, and even India’s Fortune 500 firm Indian Oil, are kicking off promotional and advertising strategies to crank up sales.

Coca-Cola India’s national market-activation programme around the World Cup debuted today, with a hamper of gifts and prizes for the country’s football freaks. Soccer-smitten Calcutta is where it will all spool.

Coca-Cola has developed a special Under the Crown promo for the City of Joy, in which participants will win spot and other prizes, including TV sets, football-shaped alarm clocks, sling-bags, back-packs, footballs and neck-pens branded with the special 2002 World Cup Coca-Cola logo. The cola giant has also arranged for special screenings of matches at select “Para” clubs in the city.

Not to be outwitted at the game, arch-rival Pepsi is introducing special 1.5-litre, 2-litre and 500-ml PET Pepsi bottles with images of English soccer superstar David Beckham and Brazilian striker Roberto Carlos on its label in Calcutta, Goa and Kerala — all happy hunting grounds for football. These labels can be swapped for attractive soccer memorabilia from dealers.

On the national stage, Coca-Cola will kick off a promo on a special 1.5 litre PET label. The blitz, titled Pick the Winner contest, promises winners a free trip to the country that lifts the Cup. The company also has region-specific campaigns in centres where football is a rage — for instance Kerala, Mumbai, Delhi, Pune and Gujarat.

Pepsi will also roll out road shows in Delhi, Calcutta and Kerala, where special floats decked up with images of international soccer stars will hit hangouts of the young.

The Samsung Dabake Jeeto Offer which started in Calcutta in early May, before going national, offers more juicy and pricey gifts worth Rs 10 crore, with products like Flat TVs, refrigerators, washing machines and mobile phones. The company targets Rs 310 crore worth of sales from this promotion until the Cup final.

Indian Oil is also offering lucky draw prizes on purchase of their servo brand of engine oils during the world cup period. The prizes include more than 100 colour TVs and Personal stereos and 13,000 T-shirts. Its ad line goes “one shot and 13,220 gifts and prizes ... Goal Mal Dhamal.”

Telecom operator AirTel has launched an SMS based contest on world cup football with prizes worth Rs 3 lakh including a Onida KY series home theatre system, besides holiday packages to Port Blair and Ooty, courtesy ITC Welcomgroup.

   

 
 
ATM SNAGS SPARK PANIC PULLOUT AT GLOBAL TRUST 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
Hyderabad, June 6: 
A few malfunctioning ATMs and rumours of a management reshuffle was all it took to send depositors of Global Trust Bank (GTB) to jab the panic button and form queues that snaked through lanes.

Customers had emptied around Rs 6.7 crore till this morning after a scramble for money started in some city branches on Wednesday. What jangled nerves further was a refusal to redeem some deposits that had not matured.

Reassurances that there are no problems whatsoever were not enough for depositors who had scooped up Rs 10 crore by this evening. Demand drafts worth Rs 1.3 crore against cash payments had also been issued. The bank’s deposits here are close to Rs 1,500 crore. “We have convinced many customers and paid wherever we had to,” the manager of Punjagutta branch said.

The cash clamour started on Wednesday in Kukkatpally and Ameerpet, which is home to a large swathe of affluent depositors in coastal Andhra Pradesh.

Reports that a few ATMs were not spilling out money spread like wildfire, scaring hundreds of clients and driving them to the branches in desperation. Some government officials skipped duty to queue up for withdrawals. Till late last evening, beelines were seen at ATMs connected to Ameerpet, Chandanagar, Balanagar and Secunderabad branches of the city.

Asked about reports of a reshuffle in the top-brass, the GTB managing director Sudhakar Gande said he did not see why changes that were almost 45 days old should have an impact on the customer confidence now. “We have invested Rs 2,000 crore in statutory liquidity bonds and have over Rs 300 crore in reserves.”

The hiccups come after two turbulent years, during which GTB was buffeted by the Tehelka expose on its political connections, and an aborted merger with UTI Bank. Its links with broker Ketan Parekh — and the market meltdown he is alleged to have triggered — claimed Ramesh Gelli’s, the bank’s former chairman, job.

In March last year, the GTB was once again in focus with market buzz that Gelli, also one of the promoters, and his associates were offloading their 26 per cent stake.

   

 
 
DR REDDY’S FILES FOR BLOCKBUSTER PFIZER DRUG 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 6: 
Dr Reddy’s Laboratories Ltd (DRL), which has targeted to file generic versions of over 60 per cent drugs that are slated to go off-patent by 2008, is now looking at blockbuster success in the next 12-18 months led by Amlodipine Maleate. It has filed a new drug application (NDA) with the US authorities for this.

While the original patent holder of the drug is Pfizer Inc, analysts are counting on huge gains for DRL from the generic version of this drug as the NDA would give it a three-year exclusive marketing right. The drug is believed to have sales of over $ 1 billion.

“Considering that the original patent holder has not yet initiated any counter measure against Dr Reddy’s to protect its brand Norvasc, there is a strong possibility that DRL will be able to launch its generic molecule during the third quarter of the calendar year 2003 even after considering a six-month delay in the event of a likely litigation by Pfizer,” said C Srihari, analyst at Khandwala Securities.

The generic version of Norvasc is one of the six blockbuster products targeted by DRL. The others include Ciprofloxacin, Ondansetron, Olanzipine which are going off-patent during 2004-06.

Dr Reddy’s has filed an abbreviated new drug application with the US Food and Drug Administration for Clopidogrel Bisulfate tablets 75. Clopidogrel Bisulfate is the generic version of Sanofi-Synthelabo’s Plavix. Recently Sanofi-Synthelabo Inc had filed a lawsuit against DRL alleging patent infringement.

Clopidogrel Bisulfate is used for treating patients with atherosclerosis. The product has US brand sales of $ 1.1 billion in 2001 with annual growth rate of 52 per cent.

These facts were revealed by chairman Dr Anji Reddy at an analysts meet on Wednesday. Reddy said that the company was also bullish about its DRF 2725 molecule. The molecule, currently undergoing Phase III clinical trials, has a better safety feature in addition to reducing cholesterol. It is also anti diabetic.

   

 
 
SREI NET PROFIT UP 31.6% 
 
 
BY A STAFF REPORTER
 
Calcutta, June 6: 
Srei International Finance Limited has registered a 31.6 per cent increase in its net profit at Rs 15.63 crore for the year ended March 31, 2002 compared with Rs 11.87 crore in the previous year. The business of the company has shot up by 40 per cent from Rs 453.15 crore in 2000-01 to Rs 635.81 crore in 01-02. The company’s net income stood at Rs 264.74 crore as against Rs 205.92 crore in the last financial year. The asset base of the company has increased by 35.6 per cent to Rs 1171.37 crore from Rs 863.80 crore in the previous year.

Addressing a press conference here today, managing director Hemant Kanoria said that the growth has come from three areas—construction equipment business, infrastructure project financing and renewable energy finance.

Kanoria said his company has funded two road projects in the last fiscal—one was the 65-km road in Tumkur, Karnataka, while the other, a 110-km highway between Tada and Nellore in Andhra Pradesh, is on the Chennai-Pune Highway. The Rs 600 crore Tada-Nellore BOT (build, operate, transfer) project is part of the golden quadrilateral.

Srei is also funding the Rs 72-crore Vivekananda flyover, the first BOT project in West Bengal, connecting north Calcutta to Howrah.

Kanoria added that they are in the process of restructuring the Calcutta Municipal Corporation for which it had raised Rs 50 crore last year. “They are keen to go to the market and we are working out how that can be done. We are also carrying out the revaluation of CMC,” he said.

The company has also started renewable energy finance. It finances solar home lighting systems, solar pumps and water heaters.

Srei has as its equity participants International Finance Corporation, FMO (the financial institution of the Dutch government) and the German KfW-owned financial institution DEG which holds about 20 per cent of Srei’s equity.

Kanoria said that they will soon be applying to the Reserve Bank of India for granting primary dealership status to its subsidiary Srei International Securities Limited.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 49.01	HK $1	Rs.  6.20*
UK £1	Rs. 71.39	SW Fr 1	Rs. 30.90*
Euro	.Rs. 46.02	Sing $1	Rs. 27.00*
Yen 100	Rs. 39.25	Aus $1	Rs. 27.80*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5495	Gold Std(10 gm)	Rs. 5350
Gold 22 carat	Rs. 5190	Gold 22 carat	NA
Silver bar (Kg)	Rs. 8525	Silver (Kg)	Rs. 8425
Silver portion	Rs. 8625	Silver portion	NA

Stock Indices

Sensex		3259.31		+  3.79
BSE-100		1653.04		-  1.56
S&P CNX Nifty	1064.35		+  0.15
Calcutta	 116.94		+  0.07
Skindia GDR	  NA		    —
   
 

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