Draconian bond binds Haldia Petrochem trainees
Bharat Petro, HPCL sale plan in 10 days
CESC to switch off DVC power
Tatas swivel spotlight on brand
June sales spike fuels carmakers’ hopes
Ranbaxy offers 3:5 bonus
Software exports target 30% growth
Usha Beltron may sever cable link
New schemes from LIC
Foreign Exchange, Bullion, Stock Indices

Calcutta, July 18: 
Head hunters are goggling at a draconian contract Haldia Petrochemcials Ltd (HPL) has forced 17 management trainees to sign that gives them no assurance of employment at the end of their training period and enjoins them to pay back the entire sum expended on them if they fail to make the grade.

It’s a double hammerlock for the management trainees, who have been recruited from various institutes like Xavier Labour Research Institute in Jamshedpur and the Indian Institute of Social Work and Business Management in Calcutta. The bond was introduced for the first time this year at Haldia Petrochemicals, in which the state government holds a 43 per cent stake.

HPL has undertaken to impart training to employees for a year, following which the management trainees may be recruited or asked to leave. If a trainee is asked to leave for not fulfiling the requirements of the contract, he or she will have to cough up the entire cost of the training. The bond does not spell out what the cost of training is and says that this will be determined solely by the company.

The contract bristles with inconsistencies: although HPL does not guarantee employment on completion of the one-year training (which incidentally is extendable if the trainee does not meet ‘requirements’), he must undertake at the very beginning to work for at least three years if absorbed by the company. If he fails to meet this condition, he will have to pay Rs 1 lakh for release.

Handcuffs for surety too

This is probably the first job contract that requires a third party to stand in as surety for the management trainee. The most outlandish clause in the contract is the one that requires the surety to pay the dues if the trainee is asked to leave, or leaves on his own without fulfiling the requirements in the contract.

The contract says: “Liability of the said Surety shall be up to the full amount representing the cost of training imparted to the management trainee and such other amounts as may be determined by the company.”

Lawyers said this is a classic example of a “bonded labour contract” that does not carry “quid pro quo conditions”. A senior barrister said certain conditions of the contract might not stand up to challenge in the court of law. “The contract exposes the sureties to an open-ended risk. It says they will have to pay up the entire cost of training plus “any other amount” determined by the company. There is no indication what the amount could be. The condition looks suspect for not stating clearly what the training costs are,” he added.

A spokesperson for HPL said: “The conditions are at par with industry standards and legally valid. We wanted to introduce them last year, but could not do so. For total transparency, the employees were told even before they were interviewed that they would have to comply with such conditions. Some opted out of the selection process when told about the conditions. Those who joined certainly did not have any problems in accepting the conditions.”

Setting stringent conditions for employees is commonplace nowadays, say headhunters, but HPL’s contract, they agree, is too tough on employees.

“Although these contracts tend to be one-sided, a company normally asks an employee to undertake to work for it for a stipulated length of time on completion of training, but at the same time, guarantees employment through that period.”


Mumbai, July 18: 
The government will make up its mind over the next seven to 10 days on the manner in which Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) will be privatised.

Disinvestment secretary Pradip Baijal told reporters at a seminar here today that the Cabinet would decide whether a public offer should be followed by a strategic stake sale.

The remarks led to a flare-up in the shares of the two companies; HPCL gained Rs 12.30 to close at Rs 301.20 while BPCL jumped Rs 19.95 at Rs 309. The scrips had been pummelled in recent days by the petroleum minister’s statement that an IPO would precede divestment. Baijal’s hint that it would be the other way round, helped rekindle interest in the shares.

Investor enthusiasm for the two petroleum majors had ebbed after the petroleum ministry said early this month that the companies would tap the primary market with an initial public offer before being sold to strategic partners.

Many merchant bankers had said the shares would take a beating and that the selloff would be impaired if the ministry’s plan was adopted. In the weeks after the announcement, that prediction rang true as the stocks languished.

“If it decided to go immediately for a stake sale, there will be no share sale to the public. It will be the strategic partner who will decide if and how to raise additional money,” Baijal said while speaking at an HSBC-organised seminar on privatisation in the city today.

BPCL and HPCL are two of the four refiners that dominate the country’s market for petro products with a combined share of 20 per cent.

The government is planning blanket approvals for the initial public offerings (IPOs) of IOC, BPCL and HPCL to ensure the divestment process runs its course smoothly.

Early this month, Ram Naik, the union minister for Petroleum & Natural Gas, said: “My ministry has okayed BPCL’s Rs 1,000-crore IPO plan and is in the process of doing so for IOC and HPCL. I plan to take the three proposals together before the Cabinet for approval.”

Reports that a IPO was planned to fund the ambitious expansion plans of petroleum companies generated considerable concern in the market, particularly in the case of BPCL and HPCL — the two state-owned firms up for divestment this year. The anxiety was that an IPO would disrupt the selloff schedule.

While HPCL is also planning to come out with a Rs 1,000-crore IPO, Indian Oil is weighing a Rs 1,600-crore flotation.

States turn sellers

Disinvestment of public sector undertakings is emerging as a priority even for state governments. The Punjab government, for instance, will soon invite bids for three of its units — believed to be Punjab Tractors, Punjab Communications and Punjab Alkalies & Chemicals.

Mukul Joshi, the principal secretary in Punjab’s department of industry and commerce, said the disinvestment of these companies would be put on the fast track. The remark sent the Punjab Tractor stock soaring by Rs 23.30 at Rs 163.75 on BSE; the Punjab Communications share was up Rs 11.60 at Rs 69.10.


Calcutta, July 18: 
CESC Ltd, the RPG group power utility, has decided not to buy power from Damodar Valley Corporation next month onwards. It will instead meet its requirement either from its own generation or from the West Bengal State Electricity Board (WBSEB).

The move has sparked fresh controversy, with DVC officials alleging that CESC is not honouring the power purchase agreement signed with it. DVC said that CESC had entered into a power purchase agreement which was valid till March 2004. However, CESC managing director Sumantra Banerjee said, “The power purchase agreement expired on December 1994. After that we had not entered into any sort of agreement with DVC. If they have any valid agreement they can show us.”

DVC officials argue that “there is an agreement but CESC denies it.” DVC is now resorting to a bit of arm-twisting. It has refused to let CESC lay cables from its sub-station at Andul, which happens to fall within DVC’s premises, on the grounds that the utility was not honouring the PPA.

CESC buys power from DVC for supplying it to the consumers of Howrah district. Banerjee said the decision of not lifting power from DVC follows the directive of the State Electricity Regulatory Commission.

DVC supplies power at rates higher than that of WBSEB and CESC.CESC buys power from DVC at Rs 2.90 per unit and from WBSEB at Rs 2.50 per unit. CESC buys about 30 MW power from DVC. “We have however, reduced it to 15 MW at present,” Banerjee said.

He added that if DVC is willing to sell power at a cheaper price then they are open to buying power from them. CESC used to buy 210 million units of power from DVC annually, and almost 1000 million units per annum from WBSEB.

Asked what would happen if DVC did not allow CESC to lay cables within their premises, he said steps are being taken to ensure consumers do not suffer. CESC also uses DVC’s control room on lease.

DVC has also raised the issue of dues that CESC has failed to clear till date. “They are not clearing their monthly bill regularly,” DVC officials said. According to DVC, the dues are nearly Rs 64 crore. But CESC claims the dues are only Rs 30 crore. “We are also clearing our monthly dues regularly. We will pay the arrears in 36 instalments according to Calcutta High Court’s directions. We have already paid the first installment,” Banerjee said.


Calcutta, July 18: 
Nothing like the brand-wagon to reach out to hearts and minds—for the Tatas, especially, the strength would be embodied in the symbol.

The Rs 40,000-crore group that hawks things as different as salt and steel will now sell more than merchandise—it will peddle promises. Promises of quality and assurances of service.

The consumer, according to Tata brand warrior R. Gopalakrishnan, is not looking for just a product. He wants a promise that has the force of the country’s second largest group. Where there’s everything in a name.

That puts the spotlight on the brand, and the need to nurture it, the urge to take it to a height where it’s a status symbol — an apotheosis of everything the Tatas stand for.

“To me, brand is one of the most important things, especially for a group like ours, which has a diverse business portfolio, from steel to telecom to automobiles,” the Tata executive director said here today.

Every household identifies with the Tatas in myriad ways. “The people have, over the years, developed a close association with the house that initiated the Swadeshi business one-and-half century back.”

Initially, as the group went about the arduous task of putting building blocks in place, the brand was not nourished enough. There wasn’t a conscious effort to groom it in the way men and machines were. “Now, the brand must be nurtured and championed in a market exposed to severe competition,” Gopalakrishnan said.

Branded wares gave the Tatas a paltry 10 per cent of its turnover 10 years ago. “Our target is to earn 60-70 per cent from brands in the next three to five years,” he says.

An amount of Rs 250-300 crore will be pumped in over a period of three to five years to build the Tata brand so that it can take the country and world by storm. The brand building exercise will also weave the ‘not-very-closely-knit’ group companies into a tighter entity.

“The world knew the Tatas offered a product or service. But there have been differences within which needed to be effectively sorted out. To me, brand building is a series of efforts to bring all manufacturing units and services under one umbrella.”

“Indeed, if one has to recognise the brand as a promise, then the custodian of the promise is centralised. The group companies, therefore, have huge responsibility to match the strength of the brand which is ambitious of identified as an assurance, reliability, a sense of nationalism and, above all, value for money for its millions of shareholders and other stakeholders.”

Finally, Gopalakrishnan is happy about one thing — all group firms have geared up to hitch themselves to the ‘brandwagon’.


New Delhi, July 18: 
It’s a tiny blip but carmakers will draw comfort from it: for the first time in this fiscal, car sales have risen by 5.1 per cent year-on-year in June with 42,343 units sold this year against 40,292 sold in June 2001.

Sales of commercial vehicles and two-wheelers continued to power ahead. Commercial vehicle sales —a key indicator of how feisty the economy is—rose 29 per cent in June to 14,697 units against 11,390 units in the year-ago period;

The sales and production data released by the Society of Indian Automobile Manufacturers Association showed that market leader Maruti Udyog’s sales fell sharply even as sales of Tata Engineering, Fiat, Hyundai, Honda Siel and General Motors went up.

Car sales during the April-June quarter were, however, down by 7.5 per cent at 1.14 lakh units against 1.24 lakh cars in the same quarter last fiscal. Maruti Udyog posted a negative growth of 11.33 per cent, with sales down in all segments.

According to the new SIAM definitions, in the mini segment, where only Maruti 800 is present, only 8,432 cars were sold in June, compared with 10,479 cars sold in the same month last year.

In the compact segment, Maruti posted a lead with its models Zen and Alto, which sold 8,989 cars, though it is lower than the 9,188 cars sold a year ago.

It was closely followed by Tata Indica, with sales of 7,056 cars, over 4,758 cars in June last year. Hyundai Santro sold 6,869 units in June as against 6,411 units in the year-ago period. Fiat Palio and Uno together posted sales of 3,437 cars, as against 505 units in June 2001.

In the mid-size sedan category, Hyundai Accent continued to lead the pack with 1,558 cars sold in June 2002 as against 1541 cars in June 2001. The Mitsubishi Lancer from the Hindustan Motors stable came in second but its sales were down to 1,508 units from 1767 units sold in June 2001.

Honda City also wilted with just 1,012 cars sold, against 713 units a year back. General Motors posted a marginal increase in sales of its Astra, Corsa and Swing with 606 units against a sale of 571 units in June 2001. Fiat sold 583 units of its new Sienna whereas Maruti sold only 813 units of Esteem and Baleno put together.

In the executive segment, DaimlerChrysler sold 100 units of the C-class Mercedes Benz, down from 251 C-class cars in June last. Hindustan Motors was able to sell only one unit of the Contessa. In the premium segment, overall sales improved due to the performance of Ford Mondeo and Hyundai Sonata as sales of players like Daimler Chrysler E-class and Honda Accord fell. The Sonata sold 141 units along with 45 Mondeos. But sales of the Honda Accord fell to 123 cars from 269 units sold a year back.

In the utility vehicle category, MUL sold 4,008 vans and multi-purpose Versa, compared with 4,188 vehicles in June 2001. Toyota sold 487 Qualis as against 526 in June last year. Mahindra & Mahindra maintained its sales of 1,000 units of Bolero.

Two-wheelers recorded a growth of 25.5 per cent year-on-year at 3.99 lakh units, against the 3.18 lakh units they sold a year back.


New Delhi, July 18: 
Ranbaxy Laboratories limited (RLL) has declared a 3 for 5 bonus issue subject to necessary approvals. Each shareholder will get three free shares for every five held.

The board of directors cleared the proposal at its meeting here today. Post-bonus, the paid-up capital of the company will rise to Rs 185.4 crore from Rs 115.9 crore at present.

The last time that Ranbaxy made a bonus announcement was in 1998. At that time it was a 1:1 bonus offer.

The board of directors also took on record the unaudited results for the quarter ended June 30, 2002 and the half year ended June 30, 2002.

Net profit (profit after tax) for the quarter rose to Rs 170.9 crore ($ 35 million) for Ranbaxy Laboratories Limited and its subsidiaries (consolidated global results). For the first half, net profit amounted to Rs 268.7 crore ($ 55 million).

The consolidated sales of Ranbaxy Laboratories Limited and its subsidiaries for the quarter ended June 30, 2002 was at Rs 946.4 crore ($ 194 million). For the half year ended June 30, sales amounted to Rs 1704.9 crore ($ 350 million).

In the case of Ranbaxy Laboratories Limited alone, net profit in the second quarter amounted to Rs 138.4 crore, an increase of 190 per cent over last year’s Rs 47.8 crore.

In the second quarter, RLL recorded sales of Rs 714.4 crore as against Rs 499.3 crore, registering a growth of 43 per cent.

Domestic sales for RLL in the second quarter stood at Rs 264.5 crore as against 263.3 crore in the same period last year.

Export sales at Rs 449.9 crore (Rs 236 crore in the corresponding period last year) showed a growth of 91 per cent.

First half sales of Ranbaxy rose 34 per cent to Rs 1267.3 crore.


New Delhi, July 18: 
The Indian software industry has registered a 27 per cent growth in software exports in 2001-02 and set a 30 per cent growth target next year. According to the National Association of Software and Services Companies (Nasscom), the growth engine of exports this year has been the IT-enabled services sector which grew by 67 per cent while IT services grew at 22 per cent.

Nasscom today released the findings of its annual industry survey for the 2001-02 financial year. The survey indicates that the industry grossed annual revenues of Rs 48,000 crore in India during 2001-02, against Rs 37,760 crore in 2000-01, registering an overall growth of 27 per cent in rupee terms and 22 per cent in dollar terms.

During the next financial year (2002-03), this sector is expected to generate revenues of Rs 60,700 crore.

Nasscom president Kiran Karnik said, “Although 2001-02 was a very challenging year for the Indian software and services industry, it has crossed the $ 10-billion landmark on an increasing base and generated 92,000 new jobs and provided indirect employment to over 2,50,000 people in 2001-02.”

Out of the total software revenue of Rs 48,000 crore, exports accounted for Rs 36,500 crore while the domestic software market contributed Rs 11,500 crore during 2001-02. Last year, software exports rose 29 per cent in rupee terms and 23 per cent in dollar terms over revenues of Rs 28,350 crore. “This industry has generated Rs 90,000 crore in the past six years and is expected to attract cumulative FDI worth $ 1.2 billion by 2005,” Karnik said. “This sector has contributed Rs 960 crore in direct taxes alone in the last year, which is significant when you compare this with any other sector,” he said.

The annual industry survey on the IT sector revealed that the top 20 Indian software companies accounted for 48 per cent of the total software and service exports. The MNC segment emerged as an important contributor to the total software and services export revenues with a share of 27 per cent. This included a share of 22 per cent in IT services and 45 per cent in IT-enabled services.

Out of the total software exports of Rs 36,500 crore during 2001-02, almost 63 per cent was to the Americas (the US, Canada and Latin America); 26 per cent to Europe; 4 per cent to Japan; and 7 per cent to the rest of the world. Exports to Europe saw a marginal increase of 2 per cent from 24 per cent in 2000-01 to 26 per cent in 2001-02.

The survey shows that ITES has been the growth engine for the exports sector in 2001-02. The sector grew at a rate of 67 per cent this year contributing to about 20 per cent of the total software and service exports.

In the next two to three years, the Nasscom survey projects that the domestic sector will play an important role in the growth of software. These include the energy, insurance, financial and banking services, e-governance and the manufacturing sector.

“The Indian software services industry will witness an increase in addressable market in terms of new geographies, new service lines as well as higher penetration in new verticals,” Karnik said.


Calcutta, July 18: 
Usha Beltron Ltd (UBL) is considering a move to exit the cable business in order to strengthen its core competencies in steel wire ropes and information technology.

To begin with, the Jhawar group flagship has decided to shift 50 per cent of the plant and equipment from the cable unit at Ranchi to its wholly-owned subsidiary at Silvassa. The company is weighing options to relocate the remaining equipment abroad for which it is looking at opportunities in various countries.

The Ranchi unit, which manufactures only jelly-filled cables, is not performing well over the last few years because of the over capacity in the domestic market.

UBL vice-chairman Prashant Jhawar agreed that the unit was eating into the company’s bottomline.

“We feel that opportunities for the cable business are quite limited and that from business point of view, there is hardly any reason to carry excess baggage,” Jhawar said.

Jhawar was, however, quick to point out that the time for exiting the cable business was yet to come and the company would wait for the best opportunity.

The cable business contributed around Rs 170 crore last year to the company’s total turnover of Rs 1,370. In fact, it went through such a lean phase that in the first quarter it contributed merely Rs 2 crore to the turnover of Rs 188.22 crore.

Meanwhile, the company is finalising a financial deal with German major DEG to part finance its investment in expansion of the Jamshedpur wire rope plant and to retire high cost debt.

Jhawar said DEG has already expressed satisfaction with UBL’s Jamshedpur facility and talks are on for an equity participation.

He added that if the talks went on track, DEG might be taking a little less than 14 per cent in the company. Sources said that DEG was interested in investing around Rs 45 crore in UBL. The Industrial Development Bank of India (IDBI) may also extend a soft loan to the company.

“All put together, the company is poised to raise around Rs 262 crore in the current financial year. While Rs 120 crore will be spent on capacity expansion, the remaining funds will be utilised to retire part of the high cost loan,” they added.


New Delhi, July 18: 
The state-owned Life Insurance Corporation of India is set to unveil two new policies by the month-end.

The two policies—Jeevan Rekha and Anmol Jeevan—are slated to be launched on July 22 and July 30 respectively. Jeevan Rekha is a policy combining the features of both whole-life and money-back policies.

LIC managing director N.C Sharma said, “It is one of the most unique policies that we have come up with. The scheme is attractive and no other insurance company sells this kind of policy at present.”

Jeevan Rekha is a policy that can be purchased by policyholders aged between 13-65 years. The most promising benefit of the policy is that a policyholder is entitled to earn 10 per cent of the basic sum assured every 5 years till the survival of the individual from the date of commencement of the policy.

In the event of death of the policyholder, the basic sum assured with vested bonuses and final additional bonuses, if any, will be payable to the nominee of the policyholder. The mode of premium payment can either be single, yearly, half-yearly, quarterly or monthly.

For example, for a 30-year-old male who purchases a policy of Rs 2 lakh will be required to pay an annual premium of Rs 8,720 for 20 years. In this case, the amount payable on survival after every 5 years at the rate of 10 per cent will accrue to Rs 20,000.

The other policy, Anmol Jeevan, is a low premium, pure term insurance policy without profit. Under this policy, a 30-year-old male who purchases a policy of Rs 10 lakh for a period of 10 years will have to pay an annual premium of Rs 2,280. This implies that a policyholder will have to save a meagre Rs 190 per month to be able to shell out Rs 2,280 at the end of the year.

Sharma said “The premium offered under this policy is the lowest by the standards of any life insurance company for a pure term cover. The policy is ideal for young people who believe in investing in equity and don’t want to spend a huge amount on premium”.

The policy can be purchased by policyholders in the age group 18-50 years. If the policyholder survives the term of policy, he is not entitled to any returns. But in the event of his/her death, the dependent receives the sum assured payable to the policyholder.

It is believed that LIC has set a target of selling at least 5 lakh policies each of both the policies by the end of this fiscal. The term of the policy is fixed at 10, 15 and 20 years. The premium payout can only be single, yearly, half-yearly and quarterly.



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