Selloff spree lends shine to shares of state firms
Maruti enters corporate fleet management
CII wants 2 regulators for petro sector

Mumbai, June 16: 
With the disinvestment process gathering pace, state-run PSU stocks are in the limelight, catching investors’ fancy, and figuring at the centre of many a bull run.

Investors are hoping that state governments will eventually have to sell their jewels in an exercise mirroring the central government’s. Stock markets, which have got wind of the possibility, have started valuing well run state-owned companies — which produce fertilisers to newsprint to automobiles — afresh.

Market watchers expect the governments of Maharashtra, Gujarat, Punjab, Karnataka, Kerala, Tamil Nadu and Andhra Pradesh to take the lead in divesting state-run enterprises, taking a cue from the moves made by the Union government in selling off non-core assets.

As the perception has gains ground, stocks like Gujarat Industrial Power Corporation, Gujarat State Fertiliser Corporation, Gujarat Narmada Fertiliser Corporation, tractor major Punjab Tractors, Punjab Alkali, Maharashtra Scooters and Tamil Nadu Newsprint have shot into the spotlight as likely selloff candidates.

At the same, it is clear from the pattern of trading in recent times that there has been a lot of speculation in PSU stocks.

GSFC, the fertiliser major whose share has seen brisk trading for sometime now, closed the week at Rs 36.75, a gain of 11.50 per cent. It hit a 52-week high on Friday, scaling Rs 39 on the BSE; its 52-week low has been Rs 8.

GNFC closed at Rs 35.35 on Friday, which is also a 52-week high. The stock had found no takers at Rs 19 until a few months ago. Similarly, other Gujarat government-owned companies like GMDC and Gujarat Industrial Power have ratcheted gains in the recent days.

Maharashtra Scooters, a joint venture between the Maharashtra government and Bajaj Auto, is another case in point. The company, which makes the Priya brand of scooters, came under the investors’ glare after the state government expressed its desire to divest its stake. However, at Friday’s close of Rs 90.30, it is highly unlikely that Bajaj Auto would be keen to buy the government’s stake.

Punjab Tractors, which is struggling like the other tractor makers due to dismal sales, has seen its stock vault on the bourses. Its stock has seen a 4.20 per cent jump from Rs 163.40 to Rs 170.30 on Friday. The 52-week high/low of the stock is at Rs 195/123.

The share price of Tamil Nadu Newsprint also rose on such expectations. The share pierced the earlier 52-week high on Friday when it touched Rs 46. The stock finally closed at Rs 45.55, clocking a gain of 10 per cent.

Swaraj Mazda, an LCV maker in which the Punjab government holds a substantial stake, is also in the limelight for similar reasons. The stock touched Rs 89, its 52-week high on Friday, and closed finally at Rs 85.75, a gain of 5 per cent.

Broking circles are confident that the state governments will eventually divest their stake in these companies.

However, unlike the Centre, which has already fine-tuned the divestment process, for the state governments it is still early days.

“The state governments are likely to take more time in disposing off their holdings,” confided a merchant banker who preferred not to be quoted.

Analysts are however wary to recommend these stocks to investors and opine most of these stocks are fully priced now.

Nalco bids

PTI adds: The Centre is expected to soon invite bids for appointment of global legal advisors and accountants to facilitate disinvestment of its stake in National Aluminium Company (Nalco) on the US bourses.

Expression of interest (EoI) for appointment of international consultants is expected to be sought in the next two to three weeks, official sources said. Sources added that the inter-ministerial group on Nalco’s disinvestment which met recently, also deliberated on the time-frame required for the global advisors to start preparatory work for the proposed listing.

The government has decided to offload a 20 per cent stake in the aluminium major through an ADR issue. It would further dilute its stake by way of a 10 per cent domestic offering, to 57.13 per cent from 87.13 per cent. It had earlier mandated Dutch banking major ABN-AMRO along with JP Morgan as joint advisors for the deal.

Cement Corp sale by August

The ailing Cement Corporation of India (CCI) has over 30 suitors in the fray and the process of sale is likely to be completed by August-end. “The 39 companies which have submitted initial bids include all big names of the Indian cement industry and they will bid for acquiring CCI as a whole or for its individual units,” sources said.

SBI Capital is the operating agency for sale process and it floated the initial expression of interest in September 2001 inviting interested parties to buy CCI as a whole or as individual units.

Meanwhile, the disinvestment ministry is likely to receive price bids for hotel properties of Khajuraho, Varanasi and Ranjit this week.


New Delhi, June 16: 
Maruti Udyog Limited is consolidating its presence in the ‘non-car’ businesses. After establishing its presence in auto finance, pre-owned cars and auto insurance, it is heading strongly into N2N sector—the business of lease and fleet management for the big corporate houses.

While its first customer for lease and fleet management was Gas Authority of India Limited (Gail), Maruti has recently closed deals with Doordarshan, Singer India Ltd, Reckitt Benckiser, Dupont and Sona Koyo—the OEM suppliers for Maruti.

“These companies need a range of cars right from the Maruti 800 to the Baleno, as cars have to be provided to senior executives and general managers in a company. Without making a big investment of buying the cars, the company can make a monthly payment for chauffeur-driven services at their doorstep,” Maruti officials said.

Maruti is, however, not ready to lose out on the booming business of fleet cars. Its N2N drive not only targets corporate houses, but is also ready to offer the services for fleet operators against the same conditions —acquire, maintain and even dispose of the cars.

“Currently, companies have to acquire cars by paying in cash at an aggressive interest rate. Maruti will also offer them operating and financial lease options. For a certain EMI, companies can use the vehicles over a 3-4 year period. For financial lease to a company, the residual value considered for the car will also be competitive,” sources said.

“This is a deal that suits companies as more than the money it is free of any other hassles like getting insurance, regular servicing and a certified driver against a particular payment per month. Moreover, we also have the option to change the vehicle after a period of three years if it does not suit us,” Doordarshan sources said.

Market sources said Doordarshan had ordered around 100 units of the Esteem for its use.

Globally, companies outsource fleet management to professional service providers, thereby achieving substantial cost savings and efficiency advantages through economies of scale. In the US, 70 per cent of new cars are purchased through leasing and 90 per cent of new car sales are through exchange schemes.

“Benefits to Maruti, through this scheme are great. A leasing product would definitely help push corporate sales of new vehicles,” company sources said.


New Delhi, June 16: 
Industry feels that the Petroleum Regulatory Board Bill should contain separate regulatory guidelines to develop the natural gas and petroleum products sectors as the two sectors are at different stages of development.

The Confederation of Indian Industry (CII) said that while the petroleum products industry is significantly more mature, the natural gas industry is still at a nascent stage of development. “So differentiation within the two sectors, wherever necessary, should be included in the proposed regulatory framework,” the CII feels.

The chamber feels crucial differences exist in developing markets for the two sectors. As the gas transportation infrastructure in the country is limited, the gas sector would need investment encouraging measures to build and extend the existing infrastructure network.

However, the petro products sector would require competition-enhancing measures to effectively regulate and infuse private investment. “As the market matures, the emphasis will be on developing competition as far as possible in the sections of the industry that can support it, like supply of gas, and regulating those parts that cannot sustain competition, such as distribution and transmission,” it said in a note to the government.


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