Selloff key with fund manager
Nalco gets go-ahead
Dabur to demerge pharma business
FIs spike Ispat bond rollover
Meltdown misery mugs market
Trai lends a helping hand to pre-paid users
Shipping Corp sale in turbulent waters
Rs 500-crore ADB loan for rail
Rs 5-cr Raunaq factory coming up in Uluberia
Foreign Exchange, Bullion, Stock Indices

New Delhi, July 11: 
The government is considering a plan to float an asset management company that will act as an umbrella fund manager for government stock in all public sector companies, stripping away the powers of administrative ministries to have a say in the selloff process.

It will also mull over a disinvestment ministry proposal to sell 10-25 per cent stock in different state-run companies to take advantage in the spurt in PSU stock prices, including those PSUs where the government planned to continue holding a majority stake.

The government will also set up a three-member group of ministers chaired by finance minister Jaswant Singh with deputy chairman of the Planning Commission, K. C. Pant, and disinvestment minister Arun Shourie as members which will look into financial institutions’ plans to sell PSU stocks being held by them.

The committee comes in the wake of a controversy over UTI’s proposals to sell off its stake in ITC to bidders, including BAT, a plan that ITC has lobbied against.

The committee will ostensibly see how the FIs can also “derive benefits of higher PSU stock prices” but will really decide on these ticklish policy issues, which could see management changes in several leading Indian companies just because FIs decided to offload their holding in the market.

Disinvestment minister Arun Shourie said his ministry would be working together with the finance ministry on a concept note for a gigantic AMC, which may be modelled on the lines of the Government of Singapore’s AMC.

The note, which will be considered by the Cabinet after the coming monsoon session of Parliament, may drastically curtail powers of the administrative ministries over divestment decisions in any given PSU.

Shourie almost admitted as much at a press conference here, stating “while equity may be managed by the proposed AMC, day-to-day management would be by the administrative ministry.” Clearly, this would mean carving up the government’s ownership rights over any state-owned firm.

The plan, which was mooted at today’s meeting of the Cabinet Committee on Disinvestment presided over by the finance minister, seems to be an updated version of an earlier plan proposed by the then finance secretary, Vijay Kelkar, to set up a Special Purpose Vehicle (SPV) which would control all government stock in PSUs being sold off.

Among other things, the planned AMC note may look into giving powers to the proposed fund managing giant to dabble in the secondary market with PSU stock, thus earning some extra revenues for the government.

Meanwhile, the CCD approved the strategic sale of 51 per cent equity in Manganese Ore India Limited (MOIL) in favour of strategic partner with the transfer of management control while retaining 26 per cent equity.

At present, the authorised equity capital of MOIL is Rs 30 crore of which the issued and subscribed capital is Rs 15.33 crore. At present, the Centre holds 81.57 shares in MOIL. The Maharashtra government has a share of 9.62 per cent and Madhya Pradesh holds 8.81 per cent.


New Delhi, July 11: 
The Union government today decided to put up Nalco, the Orissa-based aluminium maker, for sale to strategic bidders as well as go in for simultaneous public and ADR issues despite strident opposition from BJP’s Orissa ally, the BJD.

Disinvestment minister ArunShourie told newspersons here that the government would sell 29.15 per cent to a strategic partner, another 30 per cent through a public offering and 10 per cent through an American Depository Receipt. “All this will be done simultaneously,” Shourie said.

In all, the government will sell off 59.15 per cent of its current holding of about 87.5 per cent stake in the aluminium major. Besides the three sales, the Union government may also sell a 2 per cent stake to Nalco employees at a reserve price.

The government has also decided to appoint ABN Amro Rothschild and Enam as a global co-ordinator cum advisor and JP Morgan and ICICI Securities as joint global co-ordinators for the sales.

The minister admitted that the decision was taken despite opposition to his proposal to sell off Nalco from the Biju Janata Dal-led Orissa state government but reserved comment on whether this would affect the selloff.

Sources said BJD leader and Orissa chief minister Naveen Patnaik was likely to take up the issue with Prime Minister Atal Bihari Vajpayee soon.

The problem for Shourie is that earlier the government had agreed with Patnaik that the government could divest in Nalco through sales to the public and through ADR or GDR issues, while retaining management control for some more time at least.

Orissa politicians are incensed over the new development. They do not want a replay of the Balco disinvestment drama in their home state with opposition from labour unions snowballing into an agitation that could pit the state government against the Centre.

They feel the Centre should be more sensitive to the state’s real politics just as it has been towards another key ally -- the Telugu Desam.


New Delhi, July 11: 
Dabur India has decided to separate its Rs 162.9-crore pharmaceutical business from its FMCG (fast moving consumer goods) business.

As part of the Dabur restructuring plan, the pharmaceutical business will continue to remain within the ambit of Dabur India but will function as a separate business unit with a separate business head and functional heads. The new business unit will also maintain separate books of accounts.

A strategy group has been set up under Anand Burman, vice-chairman of Dabur India, to chalk out plans for Dabur’s pharmaceuticals business. This group compromises representatives from Dabur India and Dabur Oncology Plc. It will be responsible for the formulation of strategy for the organisation on a worldwide basis. The strategy group will also be responsible for the implementation of the short- and long-term business plans.

The decision to demerge the businesses is based on the recommendations of Accenture. The consultancy firm had suggested that a separation of the two businesses would provide greater focus and help in the growth of each business.

“The objective of this exercise is to create a global presence for Dabur’s pharmaceuticals business and take advantage of its operations both in India and in Europe. This move will enable us to harmonise our strategies, create operational efficiencies and maximise our penetration in global markets,” said V.C, Burman, chairman, Dabur India.

Burman said, “Dabur may consider the option of hiving off this business into separate entity later.”

The businesses that have been brought under the banner of Dabur Pharmaceuticals are pharma-related activities done by Dabur Research Foundation (DRF), Dabur Oncology Plc and Dabur’s bulk and formulations business (oncology and non-oncology).

During the last financial year, Dabur’s pharmaceutical business grew from Rs 152.01 crore to Rs 162.9 crore, recording a growth of 7.2 per cent and contributed 14 per cent to overall sales. According to the company, the main growth drivers during the fiscal were its globally expanded anti-cancer range of products and brands like Liv-fit, Ulgel, Honitus and Contrastin.


Mumbai, July 11: 
Financial institutions (FIs) have stalled a plan drawn up by Ispat Industries to restructure its overseas convertible bond plan worth $ 125 million.

The firm had defaulted on the repayment of the bonds, which were supposed to mature in April 2001. It has informed an ad-hoc committee of bond-holders that the consideration to be paid as part of a December 2001 agreement on financial restructuring has been indefinitely deferred in response to representations made by board members who are nominees of Ispat’s key creditors.

While Ispat officials were not willing to talk about details, it is believed that financial institutions which have invested around Rs 5000 crore in these bonds were not keen on the restructuring proposal. “Evidently, they had their interests at heart,” sources said.

According to sources, the restructuring provides for repayment of interest dues over the next 18 months, extending the maturity to December 31, 2009, semi-annual cash interest payments between 3 per cent and 4.5 per cent and annual principal repayments in 2006-2009.

Under legal documents prepared by the trustee and the committee, the financial package was due to be put to a meeting of bondholders following final board approval of documentation at the end of June. Approval of the board has also been indefinitely deferred.

Last year, Ispat had restructured their rupee loans from 17 per cent to 14 per cent. It is believed that the company is still seeking a further reduction in the costs. However, company officials declined comment on the issue.

The company’s scrip has been on a high along with other steel sector shares as the industry is on the road to a recovery. Prices of steel products have been revised upwards three times in as many months.


Mumbai, July 11: 
The meltdown in overseas markets swamped bourses at home today, dragging down the Bombay Stock Exchange (BSE) sensitive index (sensex) below the crucial 3300-mark in a 42-point loss.

Brokers said sentiment was weakened by Wednesday’s sharp fall in US markets, where the Nasdaq Composite Index and the Dow Jones Industrial Average lost 35.11 points and 282.59 points respectively.

Vicious rumours swirling around also dampened the market fervour. Among the unconfirmed stories doing the rounds was that an Alliance fund manager based in Singapore was sacked over an accounting sleight.

Then, there were fears that corporate skulduggery so endemic in the US was spreading to India. The buzz is that a handful of large companies have been flattering their books to keep investors and creditors happy.

Among the names bandied about was Rolta. It was not a coincidence, therefore, that this share topped BSE’s turnover chart, even though it lost Rs 27.50, or 18 per cent, at Rs 119.50.

The company later sent BSE a clarification, saying the inter-divisional sale of Rs 76.03 crore was a routine transaction carried out many companies in the past. It has been accused of overstating 2001 revenues by Rs 72 crore.

An official affiliated to the Alliance Mutual Fund, an institution known for its aggressive posture in the market, brushed off the rumour saying: “This is the third time we are hearing this. We can only laugh at such rumours and can, perhaps, pride ourselves that the markets get affected by stories that are related to us.” However, the reassurance was not enough to head off panic and stop operators and retail investors from selling holdings.

On Dalal Street, 133 shares, including 26 from the index, registered sharp to moderate falls while 30 others finished with modest gains. The BSE-100 index dropped 22.26 points to 1653.99 from its previous close of 1676.25. The BSE-500 index softened 16.62 points to 1190.52 from Wednesday’s close of 1207.14 and the dollex-30 finished at 553.48 against the overnight close of 560.86.

The volume of business on BSE was relatively low at Rs 1137.79 crore compared with Rs 1163.83 crore the previous day. Reliance lost Rs 12.10 to Rs 265.30, Satyam Computers dropped by Rs 6.25 to Rs 242.45, Mastek by Rs 26.25 to Rs 348.65, Infosys Tech by Rs 28.45 to Rs 3301.65 and Digital Global by Rs 12.05 to Rs 673.30.

The gainers included Lever, which rose by Rs 1.30 to Rs 194, ITC by Rs 5.25 to Rs 700.85 and Indo Gulf Corp by Rs 3.30 to Rs 65.40.


New Delhi, July 11: 
The Telecom Regulatory Authority of India (Trai) today sent an SMS to cellular operators directing them to include certain minimum information on common parameters in all pre-paid tariff plans to be introduced in future. This would help consumers to compare two pre-paid tariff plans. The directive will come into effect from August 1.

The regulator has set standard terms and conditions for prepaid cards which the cellular service providers will have to follow. It has, however, allowed them to prescribe additional terms and conditions, if so required.

The cellular service providers must now highlight the denomination and validity of the pre-paid card, the charges in case of replacement of SIM (subscriber identification module) card and the charges for replacement of a lost/stolen/damaged SIM card.

They will also have to provide the details of carryover of balance and grace period. It should be given in a stipulated format that reads: “The remaining amount, if any, at the end of the validity period, gets carried forward to the renewed card, if such renewal is done within certain days after the expiry of the validity period. A grace period of certain days after validity period will be available to the customer.”

The cellular service providers must tell subscribers about the facility to know the amount left their account and the procedure to avail of this facility. The regulator has also emphasised that the operators must mention whether the service being offered by them is toll free or not.

The details should be given in a form along with the packet when the customers come for a connection or for renewal. It should mention the cost of the card/recharge coupon, entry fee (SIM activation fee), maximum retail price of the recharge coupon and that the total amount towards talk time available in the recharge coupon.

If there are any additional charges like administration charges, other charges and service tax, it should also be mentioned in the form.

Trai has also asked the operators to mention the airtime charges and normal telephone charges as applicable and also the changes, if any. If there is any further change it should be publicised/ advised soon after the same becomes effective.

The procedure to connect through the prepaid card, for accessing customer care centre, the number and also whether the service is toll-free should also be mentioned by the operators.

A list of all toll-free numbers which are offered by the operators to their subscribers should also be mentioned in addition to that particular service and also the supplementary or value-added services.

Trai officials said the pre-paid services being offered by several cellular mobile service providers (CMSPs) on various terms and conditions often vary from one service provider to another. Subscribers are unable to make any meaningful comparison between them.

“In a meeting held in May this year by Trai with Cellular Operators Association of India a consensus on this issue was evolved and they have agreed to implement it from the stipulated date,” Trai officials said.

The operators would also have to submit a compliance report in this regard to Trai in due course.


Calcutta, July 11: 
The disinvestment of Shipping Corporation of India (SCI) is in choppy waters as bidders oppose the government-prepared transaction document.

The draft document allows the government to exercise a put option for the sale of its remaining shares between 12 and 24 months of the first phase of disinvestment, which will hand a strategic partner a 51 per cent stake.

The strategic partner, on the other hand, can only exercise its call option after 24 and before 36 months. Through the put option, the government will exercise its right to sell its remaining shares, while the call option will enable the strategic partner to buy the shares.

The bidders, sources say, are insisting that the call and put options should be aligned with each other so that there is no mismatch between the two. They have sent in their comments on Wednesday to the government and sought a change in the transaction document.

Confirming the development, a senior executive of one of the companies bidding for the state-owned shipping major, said: “There is no point having a different put and call option which will not only create confusion in the long run, but also throw up problems.”

The official agreed it is the government’s prerogative to fix a time-frame for the options, but said it must be done in a manner that leaves no room for a lag. “There should be a clear alignment between the put and call options to avoid acrimony between the buyer and seller.” The government, faced with a number of hurdles to its disinvestment in SCI, is expected to draft a new transaction document before the bidding. The government controls 80.12 per cent of the company’s equity; the rest is with financial institutions, banks and public.

Over eight companies sent the letter of interest for 51 per cent of the government’s equity, but only four, including GE Shipping, Essar Shipping, and Sterlite, are left in the fray. The suitors pulled out of the race because most of Shipping Corporation’s 96 vessels are very old.

“More important, SCI’s share price has been jacked up to a level that is almost double the correct valuation. Even if the strategic partner buys the shares from the government cheaper, it has to cough up a large amount to buy the mandatory 20 per cent from the public through an open offer. This is a big damper on the zeal of all bidders,” said one of the shippers. The SCI share was ruling at Rs 29 in the first week of January, but shot up to Rs 87.75 on Thursday. The bidders are apprehensive that a cabal of brokers have engineered the rise to make a killing during selloff, sources said.


New Delhi, July 11: 
The railway ministry is likely to get a loan of Rs 500 crore from Asian Development Bank for its proposed high-speed transport corridor between the four metropolises.

The railways are seeking multilateral funding worth Rs 13,669 crore for its various proposal to beef up infrastructure and to ensure that they do not start losing freight traffic to the roadways sector when the highways project is ready by December 2003.

While presenting his second railway budget in February, railway minister Nitish Kumar had proposed to augment the capacity in the high density rail golden quadrilateral connecting Delhi, Mumbai, Calcutta and Chennai.

“We will now run goods train at 100 km per hour speed instead of 75 km per hour to increase the capacity in this high density route by low running time of these goods trains,” said Kumar.

Sources in the railway ministry said, “This is the first tranche of the proposal for the various projects which are scheduled to be taken up over the next few years. We had approached the finance ministry in March to get funds to the tune of about Rs 13,000 crore from multilateral funding agencies to improve the golden quadrilateral network. Finance ministry and railway ministry officials had held discussions with Japanese banks, World Bank and Asian Development Bank.”

“The ADB loan of Rs 500 crore is in an advanced stage of negotiations and we are likely to sign the deal this month. A few other loans are also in the negotiation stage and are likely to be finalised soon. The amount will be used for funding various projects, but the ADB loan is likely to be used for top-priority areas in terms of competition like golden quadrilateral,” sources said.

Indian Railways, the world’s second largest railway system under a single management, carries 1.25 million tonnes of freight traffic and 12.53 million passengers daily. However, in the last couple of years, the railway’s distinction of being the lifeline of the nation is gradually fading due to constant loss of market share to road transport, declining budgetary support from the central government, slow modernisation and upgradation and unabated rise in expenditure.

In 1950-51, the railways had a impressive market share of 88 per cent as against 12 per cent by roadways in freight movement but by 1986-87 roadways had narrowed the difference. Roadways cornered 48.5 per cent market share while the railways just managed to stay ahead at 51.5 per cent by 1986-87. The difference dramatically changed in 1995-96 with roadways cornering 60 per cent traffic. The railways have not been able to increase their market share from that 40 per cent mark.

Another top-priority area for the railway ministry is the construction of bridges, both new ones and strengthening the existing bridges. Railways has already drawn up a plan to raise Rs 5000 crore to build four mega bridges in the country. Two of the bridges will be in Bihar one each in Assam and Jammu and Kashmir.

The railways’ plans are funded by internal revenue and market borrowings besides budgetary support. While market borrowings are used to procure rolling stock, gross budgetary support is used to create capital assets and internal resources are used for meeting the requirement of depreciation reserve fund and staff-related expenditure.


Calcutta, July 11: 
Raunaq Enterprises will set up a factory at Uluberia in Howrah district at an investment of Rs 5 crore. The unit, spread over 5 acres, will make plastic water storage tanks, PVC profiles, kitchen fittings and accessories. Commercial production is expected to commence next month.

The factory will have a production capacity of 1600 tonne per annum and will address the Rs 25-crore plastic water storage market in the state.

The company has entered into a buyback arrangement with Haldia Petrochemicals to source its raw materials.

Deepak Himmatramka, head of the Raunaq Group said the increasing demand for storage tanks has led to the company setting up its own manufacturing facility here.

Earlier, products were sourced from units in Maharashtra and Gujarat.

“The market opportunities are good in the eastern region. We have decided to set up our own manufacturing unit. We have also issued a replacement bond against any manufacturing defects for two years,” says Himmatramka. The company has targeted a turnover of Rs 10 crore for the first year of operations.

The West Bengal Finance Corporation (WBFC) is funding the project and Punjab National Bank is providing the working capital.

Raunaq has a network of 100 dealers and distributors in the region and plans to strengthen this network as the demand increases.



Foreign Exchange

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Calcutta			Bombay

Gold Std (10gm)	Rs. 5320	Gold Std (10 gm)Rs. 5200
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