Hutch takes battle beyond mobiles
Deadline for pre-paid users extended
Sensex rallies after slide
Steel makers chary of fifth price hike
VSNL net drops 29%
Indian Oil sends fresh feelers to HPL
Rating for power utilities soon
BSL strengthens its board
SECL to raise capacity by 38% in 10 years
Foreign Exchange, Bullion, Stock Indices

 
 
HUTCH TAKES BATTLE BEYOND MOBILES 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, July 29: 
Hutch, the cellphone service provider, has hatched a plan to knock out competition: not just the other cellular providers but also the fixed-line telephony services and the fledgling limited mobility phone services.

For Rs 2,195 a month (that includes a monthly rental of Rs 295 and a subscription of Rs 1,900), you can make unlimited incoming and outgoing calls without having to pay airtime rates.

The Talk Max plan — which it launched in Delhi today — has shaken up the competition. AirTel, which is the biggest cellphone operator in the capital, has promised to hit back soon with more value-addition in its plans that will be topped with free incoming call packages.

Under its other plan, Talk Big, subscribers will receive incoming calls free of cost and enjoy a substantially reduced outgoing rate of 50 paise for a 30-second call. The monthly subscription fee is Rs 1,500 for the plan.

The Talk Big plan has another attractive feature: it offers free outgoing airtime on three local numbers, three STD cellular numbers and three ISD cellular numbers.

Hutch and AirTel are locked in a bitter contest for top honours in the cellphone business. Last week, AirTel launched its service in Mumbai, laced with the offer of one free number for local, STD and ISD calls. Hutch’s plan ups the ante in the freebie baits.

Hutchison Essar, which is trying to emerge as the biggest pan-Indian cellular service, has become the first service provider in Delhi to roll out a range of plans that make cellular telephony ever more affordable.

Sources in the company said: “This is only the first phase. In the second, we will announce special packages for Andhra Pradesh, Chennai and Karnataka and also a new package for Mumbai. We will announce a few major tariff plans after we formalise the Hutch brand all over the areas of our operation, including Calcutta and Gujarat.”

Sudershan Banerjee, CEO, Hutchison Essar, said: “The cellular market in Delhi is less developed and the time is right for investment in its growth. With the launch of the Hutch brand, several unique initiatives were taken such as the launch of Talk Flexi, over-the-air activation and Hutch Value Adds. Today’s announcement demonstrates our endeavour to offer superior value to our customers.”

“We were the first to announce a single tariff structure in Delhi and are proud that with these two plans, we are making yet another move to eliminate the barriers to the growth of the Delhi cellular market. We continue to stand by our commitment of making cellular telephony more affordable, available and acceptable to a larger number of people and grow the cellular telephony market in India,” he added.

Besides Delhi, Hutchison is present in Mumbai, Calcutta and Gujarat and has over one million subscribers across these four circles. Hutchison, along with its partner Essar, operates in Andhra Pradesh, Karnataka and Chennai.

Saravjit Dhillon, chief executive officer of AirTel, said: “It will complement the fixed-line service. The GSM services will continue to expand and limited mobility operators will struggle to stay up with us. We were the first to launch the free incoming call and a one number free package in Mumbai. With greater competition, the consumers can expect a bonanza.”

“But the subscribers will stay with the one operator who offers the best service. The service offered by the operator will determine who will lead,” he added.

   

 
 
DEADLINE FOR PRE-PAID USERS EXTENDED 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, July 29: 
Pre-paid mobile phone subscribers can breathe easy: Cellphone companies have extended the deadline for submission of their personal details by a month.

The cellphone firms had said they would withdraw the service from customers who do not furnish personal details to them by July 31. That date has now been extended to August 31.

This means that pre-paid subscribers can recharge their numbers without the fear of a denial of service. Sixty per cent of the 6.7 million mobile phone subscribers use pre-paid cards.

The telecom companies received a notice from the government on April 26 asking them to put in place adequate processes and safeguards in order to comply with the department of telecom (DoT) or security agencies’ requirements. The personal details of the pre-paid card users will have to be maintained by the telecom companies and passed on to the relevant authorities whenever they ask for them.

The government directed cellphone companies to obtain details about pre-paid customers for security reasons. The crackdown on pre-paid subscribers follows last December’s terrorist attack on Parliament, after investigations revealed that the terrorists had used mobile phones to communicate with each other and co-ordinate their movements.

Mobile phones subscribers are reluctant to submit personal details because it could bring them under the tax net. Under the one-by-six scheme, all cellphone users are required to submit their tax returns. Most get away by using pre-paid cards that cannot be traced to them.

The government has now granted cellular operators an additional period of one month till August 31, to carry out verification of the identities of their pre-paid card customers.

A note from the department of telecommunications (DoT) said, “In view of representations and as a last and final opportunity, an additional period of one month up to August 31, 2002, is granted for carrying out the identity verification of all old customers.”

The communications ministry had recently mandated cellular operators to verify the identities of all cellular subscribers in advance for pre-paid as well as post-paid customers.

It had also stated earlier that with effect from August 1, services to any customer, who did not come forward for an identity verification, would be withdrawn.

   

 
 
SENSEX RALLIES AFTER SLIDE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 29: 
Stocks ended higher on Dalal Street after the sensex retreated below the 3,000-mark, lifted from the funk by aggressive bargain-hunters scrounging for picks in a market lashed to 10-month lows.

Sensex, the 30-share key stock market gauge, plumbed 2989.39 and hovered in that region for much of the pre-noon session. However, the tide turned in the second half, when buying by domestic and foreign funds propped up index heavyweights and stemmed the slide.

The index opened stronger at 3039.56, but fell to a low of 2955.10 before it was redeemed by the buying to close at 3030.06, a modest rise of 5.71 over the previous close of 3024.35.

Dealers, however, were not enthused by the rally, a fact reflected in the descent of broader indices. The BSE-100, for instance, declined 7.97 to 1526.07 from 1534.04, the BSE-200 fell to 366.92 from 369.31 and BSE-500 to 1097.88 from 1107.39. This is seen as an indication that mid-cap shares, having shot through the roof in the past few weeks, are ripe for more corrections.

The late recovery on BSE followed gains notched up in the other Asian markets. The Dow Jones industrial average extended its early gain to climb 261.31 points early Monday; Nasdaq Composite Index rose 33.19 points, or 2.63 per cent, to 1,295.31. The Nikkei gained 75.64 at 9666.67 in Tokyo.

   

 
 
STEEL MAKERS CHARY OF FIFTH PRICE HIKE 
 
 
FROM VIVEK NAIR
 
Mumbai, July 29: 
Four up and here goes the fifth, but the count will have to stop there — steel makers are being held back from going ahead with another price hike by a stabilisation that has taken place abroad.

The wariness this time follows four consecutive increases that saw hot rolled coil (HRC) prices shooting up by close to Rs 4,500 per tonne so far this year, to about Rs 16,000 per tonne. On the other hand, international HRC prices are ruling around $ 320 per tonne.

Some dyed-in-the-wool optimists would suggest that a fifth round of hikes — at least by Rs 1,000 a tonne — can be pulled off by companies next month. However, trends in the international market make it appear remote.

A spokesperson of a leading private sector steel major told The Telegraph that steady international prices made it difficult at this stage to comment on the possibility of a rise at home. “There is no surety of an increase this time around. We will only move with the industry trend and any decision on a rise will be based on the demand-supply situation in the country,” he added.

An official from the Tata Iron and Steel Company (Tisco) said while there has been no move towards an increase, the situation was being reviewed ‘internally’. A decision either way will be taken once it is over.

Others who are of the opinion that there is still scope for another rise point to the gap of Rs 1,000 per tonne between international and domestic prices of HRC. “Therefore, prices can either be raised marginally in August by Rs 1,000 a tonne,” sources said.

Even as the debate rages on, it is being widely felt that notwithstanding the uncertain situation on the price front, the industry is on the mend as a spike in demand from user industries, including automobile and consumer durable firms, has come as a shot in the arm.

This has given way to faint optimism that the fledgling recovery will endure for the year. An analyst said though most steel companies are poised to report promising first quarter performance, the impact of the four rounds of hikes will be felt more in the second quarter.

The recovery has already seen Tisco reporting impressive first quarter results with its net profit surging 200 per cent. The performance followed the sale of over 3 million tonnes of steel during the previous year.

   

 
 
VSNL NET DROPS 29% 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 29: 
Videsh Sanchar Nigam Ltd has suffered a sharp drop of 28.54 per cent in net profit at Rs 261.2 crore for the quarter ended June 30, 2002 compared with Rs 365.5 crore in the same quarter of the previous fiscal.

Total income for the period under review was also down 13 per cent at Rs 1,428.5 crore against Rs 1,642.1 for the first quarter of 2001-02.

Traffic volume grew about 24 per cent over April-June 2001 period while revenue from internet services decreased from Rs 57.1 crore to Rs 50.2 crore in the first quarter of this fiscal.

The international telecom and internet service provider attributed the fall in performance to the phenomenon of drop in settlement rates coupled with decline in international long distance tariff, pressure on interconnect charges and other lower income.

The decline in other income from Rs 113.8 crore to Rs 55.4 crore in the first quarter of fiscal 2002-03 was attributed to reduced foreign exchange earnings on account of lesser depreciation of the rupee and decline in interest income.

VSNL was in the process of negotiating arrangements with major domestic telecom operators for revenue sharing. Pending final agreements, income from operations as well as transmission costs, included under ‘network costs’, have been accounted for based on the ratio of revenue sharing as at 2001-02 end.

On conclusion of the negotiations, the figures would be adjusted accordingly and may have significant adverse impact on the results.

VSNL also recorded an 11.80 per cent drop in revenue from international telephony at Rs 1,187.6 crore (Rs 1,346.6 crore).

Analysts opine that the decline in profits and turnover was mainly due to price revisions. The decline was despite traffic volumes during the quarter increasing by approximate 24 per cent over the corresponding period of the previous year.

VSNL said it provides mainly international telephony service which accounts for nearly 84.79 % of the operational revenues while the balance revenue is from the value-added-services which comprises internet, leased lines, frame relay etc.

VSNL managing director S K Gupta said, “The company is in the process of working out synergies within the Tata Group and leveraging common resources to increase efficiency and reduce operational costs.”

Announcing the commencement of its backbone rollout for national long distance (NLD), the company said it would ready for launch during the next quarter.

The international long distance (ILD) traffic in minutes for June 2002 quarter rose by 23.83 per cent at 878.85 million minutes (709.73 million minutes).

Internet subscriber base grew by 11.71 per cent to 6.21 lakh (5.56).

   

 
 
INDIAN OIL SENDS FRESH FEELERS TO HPL 
 
 
BY A STAFF REPORTER
 
Calcutta, July 29: 
Moving away from its stand of acquiring 50 per cent in Haldia Petrochemicals (HPL), Indian Oil Corporation has informed the state government that it would stick to its earlier proposal of investing Rs 468 crore in return for a 26 per cent stake.

“We wrote to the Bengal government last week that IOC is keen on renewing its offer of becoming the fourth equity partner in the Rs 5,170-crore project. As an investor, we are open to negotiations with HPL’s promoters. However, we have not heard anything from the state government yet,” the official spokesperson of IOC said.

HPL sources confirmed the move and said: “We have received the proposal. We are reviewing it now.”

Apart from taking 26 per cent, Indian Oil wants to sell the entire naphtha produced — 30,000 tonnes per month — at its Haldia Refinery to HPL, of which the Bengal government and The Chatterjee group own 43 per cent each; the rest of the equity is held by the Tatas.

Talks between Indian Oil and the promoters of the project, saddled with a debt burden of Rs 4,200 crore, have been going on for a year. Now, Gail has also evinced interest in picking up a 10 per cent non-controlling stake.

IOC wants Rs 725 crore in capitalised losses to be written off either by the promoters and lenders upfront, or through a fresh issue of redeemable preference shares.

The shares, carrying a dividend at the rate of 1 per cent, would be redeemed after 20 years, sources said.

It has suggested that lenders should write off at least a part of their accumulated interest with only the balance being converted into long-term preference shares.

The IOC proposal calls for converting part of the principal on loans extended by FIs into equity. This is necessary to improve the debt-equity mix and bring down interest burden in future, sources said.

HPL’s short-term and overdue liabilities, they say, can be tackled through IOC’s equity purchase and more financial instruments in a manner that eases cash strains.

Talks to bring in a new equity partner began a year ago to scale down the debt burden. High interest payments are eating into the company’s profit, though Haldia Petrochem has grabbed over 60 per cent of the market in the eastern region and nearly 22 per cent in the country.

   

 
 
RATING FOR POWER UTILITIES SOON 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, July 29: 
The power ministry has appointed Icra and Crisil to rate the central sector power utilities to help them tap markets at home and abroad.

The agencies have also been asked to grade state electricity boards (SEBs), which will get funds from the Central government and lending agencies such as Power Finance Corporation on the basis of their rating.

Arvind Jadhav, joint secretary in the ministry of power, told the PSUs and state power boards about the move in a letter dated July 24 (No 32029/9/2002-PFC). He asked them to extend full co-operation and assistance to rating agencies in data collection and input gathering so that the exercise is completed by August 31. “Given the government’s decision to sell its equity stakes in central power sector utilities such as National Thermal Power Corporation, it has become important to rate them. This will enable them to get mileage in the markets,” officials in the power ministry said.

The ministry allocates power to states from generating stations run by central PSUs, helps state-owned firms like NTPC set up generating stations, undertakes large transmission projects, provides assistance for rural electrification through Power Finance Corporation and Rural Electrification Corporation. In addition, it gives cash grants and aid under the accelerated power distribution and reforms programme (APDRP).

“It is felt that the assistance and facilitation provided by the ministry to SEBs and utilities should be systematic and transparent with a set of objectives to be achieved,” ministry officials said.

In order to make the system of providing assistance transparent, SEBs and utilities need to be rated by independent agencies on their ability to become commercially viable, the sustainability of measures to achieve that goal. Other parameters that have to be evaluated are propensity to absorb investments, the capacity to service loans, the degree to which assets are optimally utilised and the level of operational efficiency.

“The ministry wants to make the power sector commercially viable and attractive enough for fresh investments,” the officials said. The move comes at a time when investors have been wary of the sector amid a lack of confidence in earning decent returns on investment.

West Bengal State Electricity Board (WBSEB) chairman G.D. Gautama confirmed the move, saying the Deepak Parekh Committee looking at ways to restructure finances of SEBs has recommended linking financial performance to disbursal of funds by the ministry.

The payment security measures adopted so far have not yielded desired results. There is a realisation within the sector that prompt and efficient collection of appropriate user charges from all consumers is the only way to attract investments.

   

 
 
BSL STRENGTHENS ITS BOARD 
 
 
BY A STAFF REPORTER
 
Calcutta, July 29: 
In a space of two months, BSL Ltd—formerly known as Bhilwara Synthetics—has strengthened its board by inducting three new directors.

Two of them—Sekhar Agarwal and Riju Jhunjhunwala—were inducted in May. Another, B. S. Mundhra, was co-opted as an additional director last week. Agarwal and Jhunjhunwala are related to the promoters of the company.

The move to fortify the board gains significance from the fact that BSL is facing a takeover threat from Calcutta-based jute baron Ghanshyam Sarda and his associates. They have piled up a 12 per cent stake in BSL by buying shares from the market.

The Sardas are likely to make an open offer for BSL’s shares within the next 10 days and will certainly demand representation on the BSL board if they manage to raise their stake substantially through the open offer.

However, the promoters of BSL—the Jhunjhunwalas and Churiwals—are unlikely to give in without a fight. Though they are completely silent on their strategy, the market is rife with speculations that the promoters may make a counter bid for the shares of BSL.

Besides strengthening the board, the promoters of BSL are also increasing their stake in the company. Over the last three months they have raised their holding by 2.46 per cent. As of June 30, they held 36.78 per cent in the company.

The Sardas say the actual control of the promoters may be a little more than that. “We may have to acquire an additional 30 per cent of the company’s shares to gain management control of BSL,” Ghanshyam Sarda had said earlier.

On the other hand, people close to the BSL management allege that the Sardas hold more than 12 per cent.

The Sardas recently had to give details of their transactions in the shares of BSL to the Securities and Exchange Board of India (Sebi).

The state-owned insurance companies and a few other institutions hold 8.66 per cent in BSL. The Sardas had offered to buy out their stake, but they reportedly did not respond. However, Unit Trust of India (UTI) has reduced its holding in BSL by 2.36 per cent over the last three months. UTI holds a little under 1 per cent now.

The Sardas entered the scene towards the end of March. Around the same time, the Calcutta-based SMIFS group, which held 6.33 per cent in BSL, started offloading its shares in the market. The SMIFS group still holds 100,100 shares in BSL, which represents around 1.36 per cent of the company’s shares.

The Sardas have also brought into the picture a non resident Indian—one Kailash Agarwal—as an ally in their takeover bid for BSL. He is said to be a Dubai-based textile trader.

   

 
 
SECL TO RAISE CAPACITY BY 38% IN 10 YEARS 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, July 29: 
South-Eastern Coalfields (SECL) has embarked on 15 brownfield projects to increase its capacity by 38 per cent from 65 million tonnes to 105 million tonnes per annum by March 2011. Total investment for this expansion programme has been pegged at Rs 3,521.5 crore. While around Rs 2,300 crore would come from internal accruals, the remaining funds would be mopped up either through a bond issue or from term lending institutions.

Sources said the company is toying with the idea of signing a long-term agreement with profitable power companies like National Thermal Power Corporation (NTPC) to sell coal.

“Once these agreements are successfully through, the funds generated from can be used for investment in the proposed projects.

Sources added that the main focus is on mechanisation of the existing underground mines, not only to better productivity but also to get access to coal at different depths.

“The dependence on manual operations will be reduced as mechanisation grows. The surplus manpower will be trained and deployed where necessary,” they added.

SECL currently operates 67 underground mines, of which over 30 have become non-viable. Of its total staff strength of 94,000, around 55,000 are employed in the underground mines. The company, which is the largest profitable subsidiary in the Coal India stable, has undertaken a manpower rationalisation programme through a voluntary retirement scheme.

“We have estimated that after the expansion projects are over, only seven to eight mines will be left with manual operations while the others will be mechanised,” they said.

Sources have pointed out that the company has entered into technical collaboration with Joy Mining of the UK to raise capacity in four mines using new technology. According to the agreement, the UK company will have to raise productivity in the four mines by at least 80 per cent in order to get a slice of the return on the investment.

The company has also imbibed Chinese longwall technology for better productivity.

Of the 15 proposed projects, the company needs approvals for only six projects, which are expected to come shortly.

“Our target is to raise production to 84 million tonnes by the end of the Tenth Five-year Plan and another 21 million tonnes will be added in the Eleventh Plan period after the completion of the all 15 projects,” they added.

SECL, which produced 64 million tonnes during the financial year ended March 2002, has posted a profit of over Rs 450 crore on a turnover of Rs 3,928 crore.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.75	HK $1	Rs.  6.15*
UK Ł1	Rs. 76.16	SW Fr 1	Rs. 32.65*
Euro	Rs. 48.87	Sing $1	Rs. 27.20*
Yen 100	Rs. 40.78	Aus $1	Rs. 25.70*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5130	Gold Std (10 gm)Rs. 5030
Gold 22 carat	Rs. 4845	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 8000	Silver (Kg)	Rs. 8010
Silver portion	Rs. 8100	Silver portion	   NA

Stock Indices

Sensex		3030.06		+5.71
BSE-100		1526.07		-7.97
S&P CNX Nifty	 971.65		-1.85
Calcutta	 121.42		-0.87
Skindia GDR	   NA		   —
   
 

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