AirTel storms Hutch stronghold
MTNL logs into internet telephony
ISD tariffs may drop
ACC net profit dips 55% in first quarter
UN exposes vulnerability of public policy
Sensex sinks to eight-month low
Ratan Tata wants Tisco to look beyond steel
UBI posts Rs 61-crore operating profit
Telephone users to get carrier choice liberty
Foreign Exchange, Bullion, Stock Indices

 
 
AIRTEL STORMS HUTCH STRONGHOLD 
 
 
FROM M. RAJENDRAN
 
Mumbai, July 24: 
AirTel today stormed the Hutch bastion with the launch of its cellular services in the country’s financial capital, bridging the main chasm in its grand plan to create a pan-Indian footprint. Bharti Televentures, the Mittal-owned holding company for its cellular, fixed-line and broadband services, has invested Rs 500 crore in the country’s second largest cellular service market.

On June 15, Hutchison Essar had launched its Hutch cellular services in the capital — and Airtel has now joined the battle by offering a clutch of freebies to attract subscribers in Mumbai. It has topped it up with a few benefits for subscribers in other parts of the country.

Bharti is launching for the first time a 30-second pulse in Mumbai. This facility is offered by other cellular operators, including Hutch, and it ensures that that the customer does not get billed for 60 seconds when his call is less than or equal to 30 seconds.

Customers can now carry their Mumbai rate plan and roam without paying roaming charges on all AirTel networks across the country. (The standard STD charges will continue to be applicable). This service will be available on all AirTel networks except Chennai, Calcutta, Andhra Pradesh and Karnataka, where it will be rolled out shortly.

AirTel has also made all incoming calls from AirTel to AirTel mobiles across the country free (provided they are on their home network in Mumbai when they receive them.) Now, customers are free to talk as much as they want.

A new scheme has been introduced for Mumbai AirTel customers, which gives free airtime on all outgoing calls on one international, one national and local numbers of choice without any monthly charge. (Only PSTN /STD/ISD charges will be applicable.)

The company has also introduced two plans targeted at high-ended users: the first is the AirTel Delight Plan, under which customers can get all incoming calls free for a flat monthly charge; the second is the AirTel Paradise Plan under which customers, for a flat monthly charge, can talk as much as they want with free airtime on both incoming and outgoing calls.

The post-paid subscribers in Mumbai will get a 32K Subscriber Identification Module (SIM) card with larger memory that allows storage of 250 telephone numbers in the phone book and 30 messages in the inbox.

For the pre-paid subscribers, AirTel Magic will offer “full roaming”(two-way) on pre-paid cards across western India (Maharashtra, Goa, Gujarat, Madhya Pradesh and Chattisgarh) that will be extended to the rest of the country soon.

Subscribers can now not only receive but also make calls to any place in western India, recharge from anywhere in western India (Maharashtra, Goa, Gujarat, Madhya Pradesh and Chattisgarh) and send and receive SMS. The company has invested Rs 120 crore in the new billing system.

Sunil Bharti Mittal, chairman and group managing director of Bharti, also threw down a challenge to the proponents of limited mobility — the basic operators who are planning to offer the poor man’s mobile phone service using the code division multiple access (CDMA) technology.

Mittal said the cellular service operators who use the GSM (global system for mobile communications) technology would emerge victorious in the bruising battle that lies ahead.

Speaking on the occasion, Mittal said: “It is my proud privilege to bring AirTel to Mumbai, the commercial capital of India.

   

 
 
MTNL LOGS INTO INTERNET TELEPHONY 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 24: 
In a move that may signal trouble for small players in the internet telephony business, the state-owned Mahanagar Telephone Nigam (MTNL) which jumped into the race today, announced its entry with calls to the US and the UK priced at just Rs 4.80 per minute.

The service will be available from personal computer (PC)-to-phone for 168 countries under the brand name ‘Bol-Anmol’.

Tariffs for the US, UK, Canada, Singapore and Australia have been fixed at Rs 4.80 per minute from PC-to-phone in these countries.

Internet telephony was permitted from April 1 and a clutch of private operators like Caltiger and Net4India immediately launched their services. Dial2Net’s Phonewala.com charges Rs 4.95 per minute for calls to the US while Caltiger charges Rs 3.

The new service will benefit only PC holders, but will allow them to make a call to a phone at the terminating end.

Sharma said tariffs for other destinations will be different, adding that the tariff was in addition to internet usage tariff and local telephony charges.

MTNL, which provides fixed line telephony services in Delhi and Mumbai will be servicing these two metros from today. It has applied for a licence to service the rest of the country through its 100 per cent subsidiary Millennium Telecom. Millennium Telecom will be a ‘Category A’ internet service provider (ISP).

“We hope to get the licence within a month and we will start offering services soon thereafter,” said Sharma.

   

 
 
ISD TARIFFS MAY DROP 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
Mumbai, July 24: 
Overseas call rates are likely to tumble further. Price warrior Bharti Televentures has hinted at the possibility of slashing overseas call rates to Rs 15 per minute from Rs 24 if it can sew up a new interconnect agreement with Bharat Sanchar Nigam (BSNL), the state-owned fixed line telephony operator which boasts of 33 million subscribers.

The company is in talks with BSNL and the Telecom Regulatory Authority of India (Trai) to rework inter-connect agreements and tariff for the ISD calls, both for fixed-to-mobile and mobile-to-mobile calls.

Speaking on the sidelines after the launch of AirTel mobile cellular service in Mumbai, Sunil Bharti Mittal, chairman and managing director of Bharti group, said: “One needs the will of the biggest operator BSNL and the regulator’s intervention to effect a good interconnect agreement. Once this is achieved, the prices can be brought down not only for the ISD but also for STD and local calls.”

Last Friday, the Bharti group launched its international long distance (ILD) services under its IndiaOne network and slashed overseas call rates by 40 per cent to Rs 24 per minute, forcing Videsh Sanchar Nigam to follow suit.

Mittal also lashed out at the government for charging the performance bank guarantee on the revenue share.

“Currently, we are paying advance revenue on a quarterly basis, which goes against the rationale of having a performance bank guarantee. This needs to be corrected because it helps the banks boost their incomes. If we were allowed to use this amount, we could be expanding the networks,” said Mittal.

“On an average, about Rs 10,000 crore is lying with banks as performance bank guarantee. We alone have submitted guarantees worth Rs 1,800 crore,” added Mittal.

Bharti Tele-Ventures had about 19 lakh customers comprising mobile, fixed-line and internet customers, on June 30. Of these, 16 lakh are mobile customers.

The company offers mobile services in 14 of the country’s 22 circles and intends to provide mobile services in Gujarat soon, for which the company has obtained a licence from the department of telecommmunications (DoT).

   

 
 
ACC NET PROFIT DIPS 55% IN FIRST QUARTER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 24: 
In a clear indication that recovery in the cement industry is still far from reality, Associated Cement Companies Ltd (ACC) today reported a 54.85 per cent decline in net profit to Rs 19.84 crore for the first quarter ending June 2002, as against Rs 43.95 crore a year ago.

Operating profit before interest and depreciation for the first quarter was lower at Rs 104.47 crore, compared with Rs 152.09 in the year-ago quarter.

The company attributed the decline in net profit to the gross cement price realisation for the first quarter falling over 13 per cent from the previous comparable quarter’s figure.

“The impact of the severe drop in cement prices was offset to a great extent by increase in sales volume coupled with the ongoing improvement in operating efficiencies and other cost reduction measures,” managing director TMM Nambiar said in a statement.

Total expenditure, including raw material, coal, power and fuel for the first quarter of 2003, has gone up only around 14 per cent from the year-ago figure, despite the 22 per cent increase in sales volume.

What was heartening for ACC was that sales volume of cement, including traded cement, at 36.34 lakh tonnes was higher by 22 per cent over the previous comparable figure.

In a signed statement, Nambiar exuded hope that as the supply side is more or less capped with no new capacities being set up for the time being, the demand-supply equation is expected to narrow resulting in better cement prices compared to the prices prevailing currently.

The cement industry has posted a growth rate of 7.6 per cent, as against 3.7 per cent a year ago.

The industry is expected to record a growth of around 10 per cent mainly on the back of buoyant demand from the housing and infrastructure sectors.

ACC said the profitability of its refractory and RMC businesses have improved despite the increasingly difficult business environment.

Depreciation for the first quarter was higher at Rs 40.67 crore compared with Rs 35.28 crore in the previous period due to the commissioning of New Wadi plant in October 2001. Interest for the period was lower by 8 per cent from the previous corresponding period.

Meanwhile, the company, in line with its strategy to stick to the core business, has decided to divest its entire 35 per cent stake of 1.52 crore equity shares in International Ferrites Ltd to Epcos AG of Germany, which is subject to necessary approvals.

Further, the company has also divested its entire holding of 13.15 lakh shares in Gruh Finance Ltd in favour of HDFC.

   

 
 
UN EXPOSES VULNERABILITY OF PUBLIC POLICY 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, July 24: 
Why do business interests influence public policy in democracies? The UNDP Human Development Report 2002 believes it is because “businesses tend to command resources and access unmatched by other groups—whether representing workers, consumers or environmental causes.”

The report, released at a time when the Indian Parliament has turned into an another arena for corporate warfare, estimates that big businesses in India provided 80 per cent of financing for major parties during the last general elections to the Lok Sabha.

It points out that “corporate donations and lobbies often drown out voices of workers, consumers, women, environmentalists and other citizen groups,” citing the example of the $ 3-billion Dabhol power project which ignored the concerns voiced by locals, environmentalists and other groups.

“Cases like this feed public scepticism about corporate accountability,” the report states. In 1999, Gallup interviewed 57,000 people in 60 countries and found widespread suspicion and scorn for corporate conduct and higher expectations of corporate social responsibility.

Two thirds of those surveyed said companies were responsible for bribery and corruption in their countries. It also states that companies influence how policies are applied—by negotiating implementation schedules, supporting certain nominees for official appointments and influencing the judiciary.

   

 
 
SENSEX SINKS TO EIGHT-MONTH LOW 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 24: 
Dalal Street was swept away by a wave of bleak reports as the sensex shed 69.45 points, or 2.19 per cent, to end at 3,107.48 — an eight-month low.

What deepened the fear was that outstandings in the derivatives segment shot up to an all-time high of Rs 2,600 crore. This coincided with a bleak statement from the Union agriculture minister that the drought looming large over country could be the worst in a decade.

If this were not enough, worries about global markets proved to be the last straw. Investment bank JP Morgan, which some weeks ago reportedly was running up a short position in gold, was feared to be in trouble.

However, the blue-chip Dow rallied 3 per cent early Wednesday after an initial drop as Morgan took the bite out of fears of corporate malfeasance and helped spur bargain hunting in a market trounced to five-year lows. Its chairman put out a denial that calmed nerves. The stock soared $ 2.37, or almost 12 per cent, to $ 22.45 and emerged as the biggest percentage gainer on the blue-chip Dow. It had slammed to its lowest level since January 1996 earlier in the day.

Earlier, the Nasdaq futures was down 14 and Dow futures slipped 88. The French, UK and German markets were down almost 4 per cent — enough reason for investors to scoot.

European stocks slumped more than five per cent to fresh five-year lows on Wednesday afternoon as investors fled on worries the bear market will claim more corporate victims while earnings reports disappoint. By 1403 GMT, the FTSE Eurotop 300 index of pan-European blue chips was down 5.2 per cent at 829 points, a level last seen in 1997.

Back home, 138 shares, including 27 from the BSE sensex, suffered sharp falls while 26 others finished with moderate gains. Market watchers expect the current slow and gradual decline in shares to be sharper as values bottom out. The derivatives market is bracing for Thursday, the last day of settlement in this segment.

It is believed that the exposure in the derivatives market is extraordinarily high at Rs 2,600 crore; usually, the exposure is skewed in favour of long positions. With share prices close to their bottom, it is expected that many speculators and investors would try and cut their losses by scampering out of open positions.

Mirroring the sentiment in Jeejebhoy Towers, the NSE S&P CNX Nifty index lost 14.82 points to close at 1,007.10. Analysts were of the opinion that sustained weakness in the US markets was hitting infotech firms.

Infosys Technologies, the bulwark of the tech sector, slumped 4.75 per cent (by Rs 152.85) to Rs 3,066.85 on news that its US-based global sales and marketing head Phaneesh Murthy resigned to defend himself in a suit. Murthy has been responsible for its US sales, which account for a bulk of the company’s income.

Satyam Computer was down by almost 5 per cent, or Rs 10.65, at Rs 220.45. Analysts said it was affected by the sustained fall in US markets, especially Nasdaq. Zee Telefilms also ended 4.24 per cent lower at Rs 108.30.

Heavyweights like ITC were down 4.98 per cent at Rs 618, Reliance Industries lost 2.28 per cent or Rs 5.85 to end at Rs 250.95, Reliance Petroleum dropped 1.10 per cent at Rs 22.50 and Hindustan Lever slipped 0.84 per cent at Rs 183.35.

Automobile majors like Bajaj Auto, Telco and Hero Honda Motor also lost ground due to the monsoon miseries. ACC was down 3.24 per cent to Rs 137.30 after the company posted disappointing results earlier today. The volume of business on BSE was relatively lower at Rs 1167.42 crore compared with Rs 1428.69 crore on Tuesday.

   

 
 
RATAN TATA WANTS TISCO TO LOOK BEYOND STEEL 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 24: 
Tata group chief Ratan Tata has said Tisco needs to consider whether it should branch into a high-return, second line of business to hedge the vagaries of steel, the company’s bread-and-butter product.

He said this in response to a shareholder’s query at the company’s 95th annual general meeting here today. Tata said the steel industry has been ‘crying’ for a breakthrough in new processes that has not happened in the past few years. “The dynamics of steel plant investment has changed over the years. The industry needs new breakthrough in technology,” he added.

Insisting there was no justification in setting up greenfield steel units in these times, Tata said Tisco will have to address the issue of whether it needs a second line of business as it goes ahead.

Tata’s remarks came against the backdrop of the company’s improved performance and a forecast of 7 per cent growth this year. “If unforeseen circumstances don’t impede us, we will see a better year.”

Tisco reported a 221 per cent leap in first-quarter net profit on Tuesday. The rebound, according to the Tisco chairman, is an indication that an economic recovery is taking hold, but there are questions on whether it will be an upturn that endures through the year.

One of the things driving the spike in demand for steel is an increase in orders from companies that manufacture automobiles and a variety of consumer durables. “Based on first quarter performance and indications, there is reason to be hopeful than be dejected,” Tata said in comments signifying cautious optimism.

A few shareholders expressed concern over Tisco’s high wage bill, though the headcount has come down after voluntary retirement schemes. Tata said the employee strength is over 46,000 — after its last VRS sucked out over 2000 employees — and that staff costs would be Rs 1,200 crore more if it had not invested in such a scheme.

When a shareholder wanted to know the reasons for fluctuations in revenues over the past few years, the Tisco chairman attributed it to market forces. Despite trying circumstances, the firm modernised its plant several times to remain globally competitive, he said.

War horses to stay

Tata today ruled out the possibility of reviewing a group policy under which members on the group’s board relinquish executive positions after the age of 65.

Tata, who is the non-executive chairman of Tisco, will also have to renounce any executive position held by him in Tata companies after he turns 65.

Tata made the comment in response to views expressed by a couple of shareholders who wanted him to continue in his executive positions — something that would require a second look at the group policy. “There has to be movement in the company,” Tata told his admirers.

The promoters, he said, would hike their stake in the company from the current 26 per cent when circumstances permit.

   

 
 
UBI POSTS RS 61-CRORE OPERATING PROFIT 
 
 
BY A STAFF REPORTER
 
Calcutta, July 24: 
The city-based United Bank of India (UBI), which has shed its weak bank stigma, has registered an operating profit of Rs 61 crore in the first quarter ending June 30, 2002, as against Rs 7.6 crore in the corresponding period of the previous year.

Even though operating profit has shown a quantum jump, credit offtake has been maintained at the same level of the first quarter of the last fiscal.

Speaking to reporters here today after attending a seminar on “Finance to industries and services” organised by Bengal National Chamber of Commerce, UBI chairman and managing director Madhukar said, “The credit offtake in the first quarter is Rs 100 crore. The growth has come mainly from the retail sector. The offtake is comparable to the previous year.”

The bank, which is considering new areas of investment, plans to enter film financing and information technology in a serious way. “The bank is seriously considering film financing. However, the response in the eastern India is not encouraging. We are open to joining hands with other banks and investing in this area as a consortium partner. We can invest around Rs 50-Rs 100 crore in films,” he said.

UBI is also eager to provide financial assistance to the entrepreneurs who are keen to set up educational institutions, hospitals, and is also looking at an opportunity to enter the road construction business.

The bank is taking steps to reduce the cost of deposits by 1-2 per cent. “We have already reduced the cost of deposits from 7.5 per cent to 7.2 per cent,” he said.

The bank may reduce the prime lending rate by 50 basis points within a fortnight. “SBI has reduced deposit rates. We have to see how the other banks and the market react to it. Based on that we will take the decision whether to reduce the PLR.”

   

 
 
TELEPHONE USERS TO GET CARRIER CHOICE LIBERTY 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
Mumbai, July 24: 
Telephone subscribers—both fixed line and cellular—will soon be able to choose the telecom carrier through whom they wish to route their local, STD and long distance calls.

The Telecom Regulatory Authority of India (Trai) today asked all access providers (both fixed line and cellular mobile service operators) and national and international long distance operators to implement the carrier selection in their respective networks.

Trai reckons that barring a few areas, the facility will be available to the subscriber in almost all circles and in most parts of the country by the end of 2003.

However, the question of exercising a choice will arise only if more than one national long distance operator (NLDO) or international long distance operator (ILDO) is in a position to pick up the calls for long distance carriage by interconnecting his network to that of the access providers’ networks.

Therefore, the extension of this facility all over the country will be done in phases as it will begin only at places where the new national long distance operators and international long distance operators have set up their points of presence (POPs) and the concerned access provider’s switches are modified.

Under the provisions in the licence agreement and the policy directive of the government, carrier selection will be possible by dialling four extra digits called the Carrier Access Code (CAC) after ‘0’ for STD calls and ‘00’ for ISD calls, which will enable the switching system of the access providers to identify the long distance carrier selected by the subscriber, and route the call accordingly.

Alternatively, the subscriber can intimate his choice to the access providers (APs) in advance in a process called ‘polling’, so that the four extra digits of CAC could be embedded in the exchange subscriber database in advance. This will obviate the need for the subscriber to dial a string of numbers that he could easily botch up the first time.

The latter mode of carrier selection called carrier pre-selection (CPS) is implemented in telecommunication networks to provide ease to customers in dialing their long distance calls.

Both the modes of carrier selection—’Call by Call’ in which four extra digits are required to be dialled for routing of each call, and carrier pre-selection (CPS)—are required to be implemented in a time-bound manner in the Indian telecommunication network.

This direction has been given on the principle that customer is the king and should have the right to decide on the choice of carrier.

The subscriber will be able to exercise this choice in respect of both domestic long distance as well as international long distance carriers. However, the facility may not be available at all places simultaneously as it will depend on the type of the switching system and the feasibility of their upgradation to meet the requirement of carrier selection.

Till the full facility of carrier selection is available, all default traffic will be routed by the access providers through the NLDO/ILDO of their choice for onward carriage to the dialled destination. At the end of the period prescribed, the access provider will no longer be able to carry any NLD or ILD call as per its own choice of NLD/ILD carriers.

Thereafter, in all cases of long distance (i.e. prefix ‘0’) calling, in which the subscriber has not pre-selected his carrier and has also failed to dial the four-digit pre-fix i.e. carrier access code (CAC), the calls will be routed by the access providers (BSOs /CMSOs) to a recorded announcement. Through the announcement, the subscriber shall be requested to select his long distance carrier either on the basis of Call-by-Call or Pre-selection.

If he does not make the choice, the announcement will request him to do so. In effect, when carrier selection through call by call or pre-selection is in place, there there will be no default traffic.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.69	HK $1	Rs.  6.15*
UK £1	Rs. 76.28	SW Fr 1	Rs. 32.75*
Euro	Rs. 48.25	Sing $1	Rs. 27.60*
Yen 100	Rs. 41.60	Aus $1	Rs. 25.90*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5300	Gold Std(10 gm)	Rs. 5200
Gold 22 carat	Rs. 5005	Gold 22 carat	NA
Silver bar (Kg)	Rs. 8325	Silver (Kg)	Rs. 8340
Silver portion	Rs. 8425	Silver portion	NA

Stock Indices

Sensex		3107.48		- 69.45
BSE-100		1581.57		- 29.16
S&P CNX Nifty	1004.05		- 17.85
Calcutta	 114.85		-  1.69
Skindia GDR	  NA		    -
   
 

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