Guessing game on RIL succession plan
Dhirubhai’s stroke cripples bourses
100% FDI in tea plantations
July 31 last date for filing tax returns
Rail carve-up plan firmly on the track
Citizen card to overcome identity crisis
ITC to up stake in Nepal venture
Umbrella brand for foods
Pak sweetener for Indian tea
Foreign Exchange, Bullion, Stock Indices

Mumbai, June 25: 
The hospitalisation of Dhirubhai Hirachand Ambani, who has steered the Reliance group to dizzying heights, has raised questions about the succession pattern within the Rs 65,000-crore group.

The patriarch is now assisted by his two sons—Mukesh Ambani (45) and Anil Ambani (43)—in their capacities as vice-chairman & managing director and managing director respectively.

Sources close to the company say Mukesh Ambani is responsible for “operational aspects” of the group and younger brother Anil is more involved with the “financial aspects”, thus indicating that a demarcation of their roles already exists in the group.

Although sources did not comment on whether a clear-cut succession plan had been worked out in the group, they pointed out that since there were no conflicts between Mukesh and Anil Ambani, their present responsibilities are unlikely to be disturbed in the near future.

Unconfirmed reports say that Dhirubhai Ambani has largely been playing a more behind-the-scene role since he suffered a heart attack in 1986.

However, industry circles do not rule out the possibility of Mukesh Ambani donning the responsibility as the group chairman in the event of any unfortunate development.

“The Reliance group has its hands full for the next few years at least. It is implementing an aggressive infocom programme and is aggressively bidding for public sector units—especially in the area of oil and petrochemicals—that are being put on the block. Given such ambitious plans, the current structure followed in the group of Mukesh and Anil apart from Hital and Nikhil Meswani overseeing key initiatives is positive,” remarked an analyst.

It is believed that while the RIL vice-chairman and managing director is directing the group’s infocom foray, the quartet is responsible for most of the other core ventures that include refining and petrochemicals.

The group, it may be recalled, is in the critical stages of implementing its gigantic infocom project that entails an investment of over Rs 15,000 crore. Reliance’s strategy is to roll out an all-optic-fibre that will offer a complete bouquet of voice, data, image and video services among a host of others. It has also set its sights on the upcoming divestment of key oil majors, including HPCL and BPCL.

Sources close to the group said that since their induction into the group during the early 80s, both Mukesh and Anil had adapted “extremely well” and in fact, have been responsible for some of its crowning achievements.

“For instance, Mukesh Ambani successfully led the creation of the mammoth refinery in Jamnagar in record time. He was also an active force behind the creation of various manufacturing facilities,” remarked a source close to the group. He added that similarly Anil Ambani has pioneered several financial innovations in the group, including their various overseas offerings.


Mumbai, June 25: 
If it was border tensions that had the bourses in its grip a few days back, today it was news about Reliance group chairman Dhirubhai Ambani’s admission to a city hospital following a cerebral stroke that sent the markets into a tailspin, with the Reliance twins leading the slide.

While nervous selling in the Reliance Industries counter saw the stock end lower by 3.44 per cent to Rs 273.65, shares of the country’s largest private sector refining company, Reliance Petroleum, sunk by close to 4 per cent to Rs 24.15.

Both these counters witnessed huge trading, with close to 97 lakh shares being transacted during the day. While Reliance emerged as the largest traded counter with 58.22 lakh shares being transacted, resulting in a turnover of Rs 159.27 crore. RPL saw total trades of 38.66 lakh shares and a turnover of Rs 9.39 crore.

Both the companies are awaiting the Mumbai High Court’s approval for a merger that is expected to make Reliance Industries the country’s largest private sector company. However, by the close of today’s trading, the two had somewhat recovered from the near 5 per cent drop during the day. Both of them have a weightage of close to 15 per cent in the BSE sensex.

“The fall was a sort of emotional reaction by the markets to news of Dhirubhai Ambani’s hospitalisation. However, with reports later emerging that his condition was stable, the two clawed their way back. But both these stocks are likely to be news driven from now on,” summarised a broker.

On the other hand, Reliance Capital, the group’s financial services company was lower by over 5.40 per cent to Rs 55.85, while Reliance Industrial Infrastructure fell 1.9 per cent to Rs 33.50. The RIL stock which opened at Rs 278, and rose to a day’s high of Rs 281.70, sunk to a low of Rs 268.05 on the news of Ambani’s illness. However, it recovered from these levels to finish at Rs 273.65. RPL, which opened at Rs 24.90 and rose to Rs 25, was hammered to Rs 23.80, before closing at Rs 24.15.

Due to the losses on these counters, the 30-share BSE sensex extended its losses to the third consecutive session. The sensex, which opened moderately lower at 3226.21, later fluctuated in an extremely narrow range between 3244.33 and 3193.68, before ending at 3214.34 as against yesterday’s close of 3231.62, a net loss of 17.28 points or 0.53 per cent. Brokers pointed out that while no significant support has been forthcoming from both foreign and local institutions, buying was today observed in a few IT counters.

Market observers said that the buying in these counters followed improved prospects in the current quarter. “There was all-round buying in most of the steel stocks following news about a fourth round of hike in steel prices in July,” an analyst said.

This apart, significant announcements by the government relating to liberalised FDI norms in the tea and publishing sectors propelled interest in these counters. Earlier in the day, the government announced 100 per cent FDI in the tea sector, apart from allowing 26 per cent FDI in the print media.

Following this announcement, Navneet Publications zoomed 11.7 per cent to Rs 194.90 and Macmillan Industries shot 8.4 per cent to Rs 249.75. Similarly, Sandesh Ltd jumped 10 per cent to Rs 122.10 while Tata Tea gained 4 per cent to Rs 211.85 and George Williamson also spiked by close to 20 per cent to Rs 83.60. Mid-Day Multimedia also shot up by 20 per cent during the day.


June 25: 
The Union Cabinet today allowed 100 per cent foreign direct investment (FDI) in tea plantations, raising a cup of cheer for the ailing tea industry.

The proposal was cleared with the rider that the foreign company would have to divest a 26 per cent stake within five years to an Indian company or to the Indian public.

Announcing today’s Cabinet decision, Union minister for communications, information technology and parliamentary affairs, Pramod Mahajan, said in case of any change in the pattern of land use, prior approval would have to be taken from the state governments concerned.

The Consultative Committee on Plantation Association had suggested that a foreign stake should be restricted to 74 per cent, while the United Planters’ Association of South India had said it could be considered up to 100 per cent.

Officials said regions like Assam, Bengal and other states in the north-east could see a surge in investment in tea plantations as a result of the government’s decision.

With stiff global competition in the foreign market, which is likely to hit the domestic markets as well, it is important that investment in this sector should be encouraged, officials said. The world-wide slowdown gripping the tea industry has affected Indian tea prices and exports as well.

India is one of the major tea producing countries in the world and accounts for 27.7 per cent of the global tea production, with a total area under cultivation of over 5,00,000 hectares. Indian tea is exported to more than 80 countries and accounts for 15 per cent of the global tea trade.

Mixed response

The decision comes at a time when the chips are down and fresh investments may not deliver justifiable returns, experts feel.

“The return on investment does not justify further infusion of funds at this point. Unless tea prices firm up and profit margins improve, there won’t be many overseas companies investing in the tea industry in India,” said S. K. Mitra, chairman and managing director, George Williamson (Assam).

Though a number of UK-based companies had earlier expressed willingness to increase their stake in their Indian operations to 100 per cent, it is unlikely that they will buy out the shares held by retail and institutional shareholders.

However, Hindustan Lever Ltd and Tata Tea Ltd (TTL) today welcomed the government’s decision to allow 100 per cent FDI in tea, including plantation.

“The tea plantation sector requires major investments in terms of replanting and tea processing facilities,” an HLL release said.

TTL managing director Homi Khusrokhan said: “We think it is a sensible move on the part of the government and will provide an attractive exit option to some players who have been adversely affected by the difficult conditions.”


New Delhi, June 25: 
The government today announced that the last date for filing income tax returns for salaried class and pensioners would be July 31 instead of June 30. It also introduced a new system for the companies to file tax returns of its employees in bulk from July.

The Central Board of Direct Taxes (CBDT) will open separate counters in Delhi for receiving returns from salaried class, and pensioners and senior citizens, besides giving the latter refunds on the spot.

CBDT said that it was mandatory to quote correct Permanent Account Number and any failure in this regard will attract penalty. It was also compulsory to file returns even if tax was deducted at source.

The government has already announced that salaried class could file their returns in the old Saral form (2d). Personal income tax assessees covered under one-by-six scheme could file their returns in forms 3,2d or 2c.

In another notification, CBDT said companies can avail the scheme of filing salary returns of employees in bulk through Saral form no-2d or through form no-3.

The scheme will be introduced in 16 cities—four metros, Ahmedabad, Bangalore, Baroda, Bhopal, Chandigarh, Jaipur, Gandhinagar, Hyderabad, Nagpur, Pune and Thane.

RoC modernisation

The department of company affairs (DCA) has earmarked about Rs 25 crore to modernise and overhaul the functioning of the various offices of the Registrar of Companies (RoCs).

DCA officials said the amount may go up, depending on actual needs and requirements. DCA has undertaken the computerisation of the RoC offices and plans to provide most routine services online.


New Delhi June 25: 
Operation Carve-up has begun at the railways which intends to create two new zones—East Central Railway with its headquarters at Hajipur in Bihar and North Western Railway with its headquarters at Jaipur in Rajasthan—raising the number of railway zones to 11.

The railway ministry has set up a high-level committee comprising additional members from the Railway Board to determine the role and functions of the newly-created zones.

Last week, the Centre had announced plans to create the two new zones—East Central Railway which will be carved out of the existing Eastern Railway and a part of North Eastern Railway, and North Western Railway which will comprise parts of the existing Northern and Western Railway zones.

Railway minister Nitish Kumar plans to carve out another five zones out of the existing operations, raising the number to 16, all of which will function as independent profit centres. This is the first step towards the implementation of the Rakesh Mohan committee report that was unveiled last July. The railways has been sharply divided over the implementation of some of the radical proposals in the report which include privatisation of some lines of the railways’ 65,000 route km network.

Rejecting the theory that the creation of these new zones was aimed to reduce the power of Eastern Railway as has been projected by his predecessor Mamata Banerjee, Kumar said, “It was a Cabinet decision taken in 1996 and nobody can reverse it except the Cabinet. It should not be seen as a Bengal versus Bihar tussle or a bifurcation of zones but as a territorial readjustment. As far as I am concerned, I am not strong enough to ask to revert the Cabinet decision since this was done on popular demand.”

Kumar said, “Eastern Railway still is part of the railways and its gain and loss is still a concern of the railway ministry. Moreover, the decision was taken by Ram Vilas Paswan in his capacity as railway minister and has been notified now. The objective of creating new zones is to increase efficiency and quality of service.”

He pointed out that in 1996, the Cabinet had decided to create five new zones and two more zones were added in 1998. But, the jurisdiction of these zones had, so far, not been demarcated and notified. The jurisdiction of the remaining five zones is under discussion.

A decision on this will be taken soon, said Kumar. “It is not fair to comment that the decision has been taken to favour Bihar. A closer look at all the divisions will reveal that no part of West Bengal has been taken and added to the new East Central Railway Zone,” he added.

The seven new zones, including the two notified are North Western headquartered at Jaipur, South Western (Hubli), West Central (Jabalpur), North Central (Allahabad), East Coast (Bhubaneswar) East Central (Hazipur) and Bilaspur (Bilaspur).

The two new zones will start functioning with effect from October 1. With the creation of two new zones the number of functional zones of Indian Railways will go up to 11.

The nine existing zones are Central (Mumbai), Eastern (Calcutta), Northern (Delhi), North Eastern (Gorakhpur), North East Frontier (Guwahati), Southern (Chennai) South Central (Hyderabad), South Eastern (Calcutta) and Western (Mumbai).


New Delhi, June 25: 
For all those who have been worried sick about proving their identity in the absence of a ration card or a voter’s ID or a car licence or a PAN card, help is at hand.

A national citizen card—which is a single, multi-purpose digital card—is expected to be introduced shortly by the newly-created Society for Electronic Transactions and Security (SETS) and the National Association for Software and Services Companies (Nasscom).

The card can be used as a voter ID, to operate a bank account, as well as a ration card, among several other applications.

President-in-waiting A.P.J. Abdul Kalam today asked the two organisations to work together to popularise and take up the mission of bringing out a national citizen card.

Speaking at a seminar on ‘Information Security’ here today, Kalam called for protecting the country’s ancient knowledge and culture against multiple attacks launched from many directions.

“The core requirement for knowledge protection is two-fold. There should be a focused approach to intellectual property rights and related issues and major private sector initiatives have to be launched in the area of technology generation for information security,” Kalam said.

Expressing concern over the threat of electronic attacks on India’s information technology systems through hacking and other methods he said, “Our communication network and information generators have to be protected from the electronic attacks through surveillance, monitoring and building technologies to handle such attacks.”

Kalam urged industry and the government to work together to make India a knowledge power within a decade. However, this growth should be achieved through societal transformation and wealth generation.

“India has to have the second vision —similar to what we had in 1857. Our first vision of the nation was the freedom movement, the second vision is a national voyage for the young with hard work, devotion and dream in minds that will lead the nation to a developed India,” said Kalam.

Launching the SETS, R. Chidambaram, principal scientific advisor to the government, said, it will address the issues of protection, surveillance, monitoring and certification. This is important in order to provide protection to databases, including those relating to national security.

SETS will also monitor the development of a “Made-in-India” encryption/ decryption and firewall solution software for PAIN. This software will assure all concerned that their transaction will provide privacy, authentication, integrity and non-repudiation (PAIN).

The society, with strong participation from the government and the private sector will sensitise the marketplace on the need for and demands for information security, develop information security products for the domestic market and certify security products for the civilian sector.

The society has been set up based on the recommendations of a report on information security, which was released by Kalam.


Calcutta, June 25: 
Faced with rapid decline of cigarette sales in India, tobacco major ITC Ltd has decided to increase its exposure in its vibrant Nepalese venture, Surya Tobacco Company, in which it holds 49 per cent now.

ITC has obtained the Reserve Bank of India’s approval to increase its stake in the company by 10 per cent. ITC intends to acquire the additional 10 per cent of Surya Tobacco’s shares from the local promoter of the company—the Soaltee group—that currently holds 49 per cent.

British American Tobacco, which holds close to 33 per cent in ITC, owns 2 per cent of the Nepalese firm founded in 1986. Surya Tobacco is among the largest private sector companies in Nepal, and contributes about 3 per cent to the Nepalese exchequer’s revenues.

The cigarette market in Nepal is growing annually at about 12 per cent, whereas ITC’s cigarette sales in India fell by over 8 per cent in the last financial year. Surya Tobacco’s brands control about 64 per cent of the cigarette market in Nepal.

Besides production of cigarettes, Surya Tobacco also grows tobacco. The company posted a turnover of Nepalese Rs 300 crore in the last financial year ended July 2001. ITC, however, fears that the increase in Maoist insurgencies may affect Surya Tobacco’s supply chain.

Back home, ITC is increasing its stake in VST Industries—India’s second largest tobacco company. ITC’s stake in VST stands at over 10 per cent now. ITC holds the shares through its investment subsidiary Russell Credit. The latter had made an open offer for VST’s shares last year, and had mopped up a little over 9 per cent of the company’s shares.

Russell Credit has also been buying the VST stock from the market. It increased its stake by close to 1 per cent since the open offer closed. Russell Credit is also pitching for acquisition of 4 per cent stake held in the company by the Andhra Pradesh government.

ITC Infotech

ITC Infotech India will invest $ 2.5 million—or Rs 12.25 crore roughly—in its US subsidiary ITC Infotech (USA). The board of directors of ITC Infotech has already approved of the investment, ITC said in its annual report. ITC Infotech India infused $ 2 million in the operations of its US subsidiary in the recent past. In addition, ITC Infotech acquired 100 per cent shareholding of the outfit in US at an investment of $ 400,000, by acquiring the shares formerly held by ITC Infotech (UK).

Explaining the bullishness on ITC Infotech (USA), ITC said: “Early signs of recovery in the US markets, coupled with the growing trend among US companies of converting onsite software development work to offshore assignments, represent significant opportunities for leveraging the world-class development centres and human capital of ITC Infotech.”

Of the two overseas subsidiaries, ITC Infotech (UK) registered a post-tax profit of £ 260,000 on a turnover of £ 3.34 million, whereas ITC Infotech (USA) posted a loss of $ 1.89 million on sales of $ 2.27 million. The principal, ITC Infotech India, suffering from the global slowdown, reported a loss of Rs 16.12 crore in 2001-02 compared with a profit of Rs 7.33 crore in the previous financial year.

Icra rating

Icra has assigned a CGR2 rating to ITC’s corporate governance practices. The rating implies a high level of transparency in ITC’s corporate governance practices and disclosures to shareholders.


New Delhi, June 25: 
The Rs 9,840-crore ITC Ltd is in the process of creating an umbrella brand for its food business which is expected to be spun off as a separate division shortly.

Sources in the company say the company wants to create an umbrella brand for its confectionery products. ITC is expected to make a formal announcement regarding this at the annual general meeting scheduled for July. The company had forayed into this segment last August.

The cigarettes-to-hotels conglomerate had recently bought the Mint-O trademark from Candico for an undisclosed sum. The product will be re-launched with an ITC branding for the confectionery segment.

“The related pre-launch product development work for Mint-O is under way,” the company says. Other products that are likely to be launched in the confectionery segment include chocolates and boiled sweets.

Sources say the umbrella branding for the various food segments is being worked out simultaneously. In the gourmet food segment, the company already has an umbrella brand which include dal bukhara, chicken chettinad and other cuisines picked up from ITC’s restaurants and sold as tinned foods. ITC is also entering the segments of packaged cereals and biscuits. It has launched packaged atta in Jaipur and Chandigarh in June under the brand name Ashirwad. Other items planned are packaged rice, maida, suji, and even breakfast cereals like cornflakes.

In the biscuits segment , the company has broadly outlined two categories. The first will be the upmarket patisseries segment comprising cookies, cakes and other bakery products which will be chosen from ITC’s own hotel pastry shops. The other category will be the mass production of factory-made biscuits.

The Kitchens of India brands was recently taken by the company to the Bollywood festival in Selfridges and later to the Authentic food market fair in Birmingham. The company is known to have tied up with a local British company for marketing it in the UK.


Calcutta, June 25: 
The abolition of import duty on tea by Pakistan has brought some relief to the Indian tea industry, which is keen to revive exports to that country. Exports to Pakistan have gone down drastically in the first four months of the current year.

Pakistan recently announced abolition of duty on 600 items imported from India, tea being one of them.

Gautam Bhalla of Warren Tea said, “We are waiting for more details on the issue, but this is definitely expected to boost Indian tea exports to Pakistan.”

Due to cross-border tensions, Indian tea exports to Pakistan have come down drastically to 0.97 million kg between January to April, as against 1.65 million kg a year ago.

Senior members of the Indian Tea Association said, “In the past, both ITA and the Pakistan Tea Association had made sincere efforts to enhance tea exports from India. Similar efforts will also be taken in the future.”

However, Indian tea is making significant inroads into countries like Iraq and UAE. Between January to April this year, exports to Iraq stood at 12.81 million kg as against 3.60 million kg in the year-ago period.

Similarly, exports to UAE increased to 7.05 million kg from 6.16 million kg in the previous year.

But Indian tea has lost a huge market in Russia. Tea exports to Russia have come down to 13.82 million kg in January–April this year, as against 23.33 million kg in the previous corresponding period.

Basudeb Banerjee, deputy chairman of the Tea Board said, “We are aware of the situation. We are currently working on a media plan specifically for Russia to sell Indian teas. We are also in talks with the Russian companies for entering into some sort of agreement to sell pure Indian teas there. The Tea Board is also examining whether Project India Blend can be rejuvenated for selling Indian teas in Russia.”

Project India Blend was formed by the five big names of the Indian tea industry which include Williamson Magor, Warren Tea, Tata Tea and others almost five years ago, to market Indian tea in Russia. However, the project did not take off well.

Indian tea exports have shown an upward trend in countries like the UK, Netherlands, Germany and Poland. The total export figure between January to April is Rs 52.61 million kg as against 51.13 million kg in the previous year—a rise of 1.48 million kg.

Based on these early indications, the industry is targeting an export figure of 205 million kg in the current year.

Meanwhile, the Tea Board has appointed two agencies—AC Neilson and IMRB for carrying out market research on the pattern of tea consumption in countries like Chile, Saudi Arabia, UAE, Syria and Russia.



Foreign Exchange

US $1	Rs. 48.90		HK $1	Rs.  6.20*
UK £1	Rs. 73.53		SW Fr 1	Rs. 31.85*
Euro	Rs. 47.52		Sing $1	Rs. 27.30*
Yen 100	Rs. 40.18		Aus $1	Rs. 27.60*
*SBI TC buying rates; others are forex market closing rates


Calcutta				Bombay

Gold Std (10gm)	Rs. 5440		Gold Std(10 gm)	Rs. 5325
Gold 22 carat	Rs. 5135		Gold 22 carat	NA
Silver bar (Kg)	Rs. 8300		Silver (Kg)	Rs. 8305
Silver portion	Rs. 8400		Silver portion	NA

Stock Indices

Sensex		3214.34		- 17.28
BSE-100		1643.35		-  6.63
S&P CNX Nifty	1055.40		-  6.45
Calcutta	 	 116.19		-  0.66
Skindia GDR	 502.54		-  3.84

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