Ferguson withdraws TFL report
Tokyo bank packs up from Calcutta
Zuari to tighten grip on Chambal Fertilisers
Oil firms flare up on Naik exit buzz
Maruti price baits hang loose
Infotech holds out hope for City of Joy
Bengal needs image makeover, says Karnik
Tea trading may go high-tech
Mitsubishi Chemicals puts faith in Haldia
Foreign Exchange, Bullion, Stock Indices

 
 
FERGUSON WITHDRAWS TFL REPORT 
 
 
OUR CORRESPONDENT
 
Mumbai, Aug. 6: 
A. F. Ferguson & Company has decided to withdraw the report that has left its client, Tata Finance Limited (TFL), squirming at damning disclosures of improper investments. It will send a new team to examine, review all data and compile a fresh report.

Alarmed at the way in which information not meant for public consumption found its way to a section of the press, the audit firm said the ‘strictly confidential’ report was being withdrawn because it felt there were ‘efforts being made to sensationalise it’. At the same time, Ferguson has not disputed the authenticity of the reports, which accused Kishore Chaukar, the former vice-chairman of TFL, of a cover-up.

According to the report, Chaukar asked for a page (page 60) to be removed from the agenda of a Tata Finance board meeting on April 30, 2001 because he felt it contained information that could ‘be detrimental to the company if it landed in the hands of regulators’. Such matters, the report quotes him as saying, ‘should not be circulated’. The report says removing the page would mean ‘suppression of vital information brought before the board’.

Ferguson was enlisted to probe the Tata Finance muddle, which rocked the Rs 47,000-crore group last year. The voluminous 904-page report was submitted to the Tata Finance board on July 9, and Chaukar, who is also the managing director of Tata Industries, stepped down as a director on the board of Tata Finance.

Today, the audit firm said it had written to Tata Finance about putting together a ‘new independent team because its standing and credibility are of utmost importance’. Ferguson claims the letter was sent on August 2.

They were also concerned that a strictly confidential report submitted in April had ‘found its way to the press’, the statement said. The firm clarified that TFL had written to it on July 23, raising a number of issues related to the preparation of the report, the conclusions drawn and its overall credibility.

On the embarrassment caused by the leaks and the fact that the report had to be withdrawn, Ferguson said: “Our preliminary reading of the report led us to believe that the client’s concerns seemed to be well placed and there were grounds for a detailed review of the report.”

The report had questioned several inter-group dealings Tata Finance entered into with sister companies.

Legal eagles are of the opinion that if there were no problems in the report — except the fact that it has been leaked to a newspaper— Ferguson will find it difficult to explain different conclusions in subsequent reports.

   

 
 
TOKYO BANK PACKS UP FROM CALCUTTA 
 
 
A STAFF REPORTER
 
Calcutta, Aug. 6: 
Bank of Tokyo-Mitsubishi (BTM) has called it a day in Calcutta after 49 years of business, ringing down curtains on its only branch in a departure it has blamed on a sweeping restructuring plan.

The 67 employees — 47 workmen and 20 officers — have been offered a compensation package that the bank claims is ‘lucrative and far above the ‘industry standard’. “For officers, it is higher than the compensation paid to Standard Chartered employees. For workmen, it is more than the payout by any nationalised bank. We will also help employees find gainful employment elsewhere,” a BTM spokesperson said.

BTM has forged an agreement to transfer the deposits of customers who have accounts at the branch to Hong Kong and Shanghai Banking Corporation in the city.

The pact, to be approved by customers and regulators, will see BTM’s personal banking customers and commercial banking clients shifting in three months. Under the arrangement, HSBC will offer its products and services to select institutional banking and trade finance customers of Bank of Tokyo.

The branch on Brabourne Road was the Tokyo-based bank’s oldest, having been opened in March 1953. “The Bank of Tokyo Mitsubishi has been undergoing a process of strategic review globally. As part of this, the bank has decided to close its Calcutta operations and transfer the deposits there to HSBC. Our other branches in India — Mumbai, New Delhi and Chennai — will continue working,” Kolchi Kayumi, general manager of Calcutta branch of BTM said.

BTM had deposits of Rs 883 crore and assets worth Rs 1,285 crore in India at the end of March 31, 2002. The bank refused to put a figure on its deposits in Calcutta, saying its policy did not allow it to do so. “As a company policy, we do not divulge segmented share of business.” HSBC also refused to specify the volume of deposits that will flow into its vaults from BTM.

Bank of Tokyo’s main areas of business in India are ordinary commercial banking activities, such as deposit taking, commercial lending and foreign exchange. The bank has Securities and Exchange Board of India’s approval to operate as a merchant banker.

Reacting to BTM’s move to transfer its deposit base, HSBC group general manager and chief executive officer Zarir J. Cama said: “I am delighted BTM reposed its trust in HSBC, giving us the opportunity to extend our services to more customers in Calcutta.

   

 
 
ZUARI TO TIGHTEN GRIP ON CHAMBAL FERTILISERS 
 
 
A STAFF REPORTER
 
Calcutta, Aug. 6: 
K.K. Birla group company Zuari Industries intends to increase its stake in Chambal Fertilisers and Chemicals—a company promoted by it in 1988—by up to 40 lakh shares this year.

Zuari will seek its shareholders’ approval to buy the shares from the market. The management of the Rs 1,233-crore company says it will invest around Rs 5 crore in raising its stake in Chambal.

Zuari holds 13.26 per cent stake in Chambal. The combined holding of the group in the Rs 1,921 crore company is 44.42 per cent. In Zuari, the K.K. Birla group holds 34.37 per cent.

Zuari’s move is in line with the group’s stated policy of increasing its shareholding in Chambal. In the last 15 months, the group increased its stake in the company by close to 3 per cent by acquiring shares from the market.

Zuari will also seek shareholders’ approval to increase its holding to Greentech Seeds International—a subsidiary in which it holds 76 per cent—by 9.22 lakh shares.

The acquisition will give Zuari near 100 per cent control over the subsidiary. Zuari will acquire the shares at Rs 14.56 apiece.

Zuari acquired majority control over Greentech Seeds in 2000-1. It had offered to buy out all the shares of the company, but some of the shareholders refused to sell their holdings. Zuari says those stakeholders are now willing to sell.

Zuari is also acquiring full control over its joint venture in the UK, Simon India Ltd. Zuari will buy the 50 per cent stake held by Simon Carves of UK for a token consideration of £ 1.

   

 
 
OIL FIRMS FLARE UP ON NAIK EXIT BUZZ 
 
 
OUR CORRESPONDENT
 
Mumbai, Aug. 6: 
The shares of Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) flared up on speculation that Ram Naik, the scam-stung petroleum minister, will lose his job. The rally came on a day battered stocks sprung to life, helping the Bombay Stock Exchange (BSE) finish with a 12-point gain at 3023.26.

The companies gained because many market operators thought the possible departure of Naik would help speed up the sale of government stake. Long perceived as the man who was throwing a spanner in disinvestment of oil companies, Naik had been insisting in recent months that an IPO should precede a selloff. Many saw this as a ploy to delay the sale.

The perceived stand-off between the disinvestment ministry and the petroleum ministry had dragged the share values of BPCL and HPCL on bourses in the past few weeks.

Today, however, BPCL totted up an impressive 5779 deals on the BSE compared with 2091 on Monday. The share opened lower at Rs 290.25 against its previous close of Rs 294.85, but it hit a high of Rs 307.65 before closing at Rs 307.65 — an increase of Rs 12.40 over Monday. Brokers attributed the interest in the two shares to the perception gaining ground in the market that the petroleum pump controversy had not ended yet, and that it would eventually claim the scalp of the minister.

Hindustan Petroleum, whose share attracted 4368 trades against the previous day’s 3140, opened stronger at Rs 2171.75, touched an intra-day high of Rs 280 and closed at Rs 279.25 — marking a spurt of Rs 8.80 from its previous finish.

   

 
 
MARUTI PRICE BAITS HANG LOOSE 
 
 
SHASHWATI GHOSH
 
New Delhi, Aug 6: 
The good times won’t last: Maruti Udyog, which cut the prices of M-800 — its entry level car — last month, is mulling plans to raise them again in two to three months’ time.

Rising steel prices and other raw material costs have made it impossible for Maruti to shoulder the burden of these costs for long. So, the message for the dithering car buyer is: go and get it now.

Sales of the Maruti 800 tumbled 20.28 per cent in the first quarter (April-June) to 24,982 cars against 34,797 in the year-ago period. The company was forced to restructure its product mix in order cut down on the production of the 800s and Omnis. But after it announced a Rs 15,000-18,000 cut in the Maruti 800 prices in late July, it has been struggling to cope with the surge in demand.

The supermini, which revolutionised the car industry back in the eighties, is back with a vengeance. “Once the sale of this entry level car stabilises, the company will be forced to increase the tag. With steel prices rising, it is not possible to sustain the price cut indefinitely,” company sources said.

“The 70-80 per cent surge in retail sales proves that the M-800 continues to remain the vehicle of growth in the car industry. It cannot be written off as an entry level car. Maruti research shows that only 35 per cent of the buyers of compact cars are first-time buyers; almost 70 per cent still make the M-800 the first choice,” the Maruti spokesperson said.

While the official accepted declining sales in the last quarter forced the company to rejig its product mix that led to cuts in the production of M-800, he declined to give exact amount of stocks the company was carrying during the period that the sales were affected.

However, dealers say that the one-and-a-half times growth in the past week has wiped out existing stocks. The Rs 18,000 cut in prices was just the right bait that brought in the customers who were sitting on money and putting off purchases.

“In a price-sensitive country like India, the cut in prices by an average 8 per cent in the entry-level segment was enough to bring back the spending in costly goods like cars. The company will continue to focus on the entry level model and initiatives like this will continue,” he said.

“There are plans to continue the excitement in the basic segment, which remains the company’s strength. Maruti is now ready to foray into the village markets with this model. We will rope in banks and financial institutions as our partners to assist us in creating a larger car-buying population,” Maruti officials said.

   

 
 
INFOTECH HOLDS OUT HOPE FOR CITY OF JOY 
 
 
OUR CORRESPONDENT
 
New Delhi, Aug. 6: 
Information technology has finally succeeded where others failed—brought hope to the ‘City of Joy’. A survey puts Calcutta fourth among the super nine destinations for IT-enabled services (ITES)—one of the fastest growing segments in information technology.

The three-month long study conducted by Nasscom in association with Netscribes reveals that Calcutta gets top billings for availability of power and is rated third best in terms of manpower. However, the city loses out in terms of city perception, where it is ranked seventh due to the state government’s inadequate IT initiatives. The other big drag on its rankings has been its poor entrepreneurship history, where it also ranks seventh among the nine cities.

“About 90 per cent of all ITES companies in India are concentrated in the nine major cities while others have not been able to attract more than two companies each,” says Nasscom president Kiran Karnik.

The study shows that Mumbai, the National Capital Region (which includes Delhi and Gurgaon) and Bangalore—which witnessed a near gold rush to set up call centres and other back-offices—are now beginning to face the competition from Hyderabad and Kochi which are fast emerging as attractive ITES destinations, primarily due to rapid improvements in infrastructure (power, international bandwidth and urban transportation) and low manpower costs due to the lower cost of living and lack of alternative employment opportunities in these cities.

Nasscom says India is experiencing the third wave of growth both in terms of geographical areas of operation and services offered. In the first phase, the industry was dominated by captive centres of large multinationals like GE, American Express and Swiss Air, who set up operations in leading metros such as Delhi and Mumbai.

In the second phase, the growth of the industry attracted numerous entrepreneurs (in many cases employees of multinationals who quit their jobs to set up ITES ventures), again in and around Delhi and Mumbai. The third phase has been more geographically dispersed —with new favourites such as Hyderabad, Pune, Bangalore, Chennai and recently Kochi.

The study says the profile of ITES firms in Calcutta suggest it is relatively strong in data processing/management/digitisation and back-office operations. However, in other areas, the city has not been able to attract many companies.

Nasscom says the main issue that needs to be tackled is the poor perception of Calcutta as an ITES destination. Offering more incentives—the Andhra way—and showcasing the city’s success stories could be the first step towards this. Another area it needs to work on is raising tele-density and bring it at par with leading cities. At present, Pune, Ahmedabad and Bangalore are the only cities that have direct international bandwidth.

   

 
 
BENGAL NEEDS IMAGE MAKEOVER, SAYS KARNIK 
 
 
ALOKANANDA GHOSH
 
Calcutta, Aug. 6: 
All the hard-sell as an investment hotspot notwithstanding, Bengal will have to actively address several issues if it wants to change perceptions about it and attract IT entrepreneurs.

Kiran Karnik, president, National Association of Software and Services Companies says, “It is necessary for the state government to take an initiative and convey the right signals to all concerned. Labour issues and industrial unrest also have to be addressed.”

Other aspects that urgently need looking into include health facilities, entertainment, housing and transport.

As part of its agenda to strengthen the domestic software industry, Nasscom will focus on developing and aiding the growth of IT companies in hitherto underdeveloped regions.

The apex body is also willing to play the part of a facilitator to bring industry and the government on a common platform to discuss Investment-related issues. Nasscom has proposed to set up office in the city, with Webel promising to provide the space free of cost.

Regarding Bengal, Karnik says human resources and connectivity, the two major concerns of the software industry, need to be looked into.

While the quality of intellectual capital in the state is beyond doubt good, connectivity remains a problem. “There are two types of connectivity—electronic and physical,” explains Karnik. “Issues like bandwidth can be solved but physical connectivity would mean better quality of roads, transport and uninterrupted power supply. The government has to take major steps in this regard. The industrial ambience also plays a major part. The state government has to ensure that political differences will not affect the functioning of industry.”

Karnik also feels that a vibrant domestic market will help in building a strong brand identity overseas. “With competition growing, it is necessary to reposition the brand image to convey quality along with the cost advantage. A brand will also ensure loyalty from the client.”

Nasscom, in its capacity as the representative of the software industry, will also provide inputs on global markets, developments and strategy to small and medium enterprises.

   

 
 
TEA TRADING MAY GO HIGH-TECH 
 
 
SUTANUKA GHOSAL
 
Calcutta, Aug. 6: 
The Indian Tea Association (ITA) is in talks with three software and service provider firms including TCS to set up an electronic trading platform for the tea industry.

The ITA had appointed international consultants AF Ferguson to suggest an alternate mechanism, apart from the traditional auction system, for marketing tea.

ITA chairman Bharat Bajoria said, “Ferguson, in its preliminary report, has suggested that the Indian tea industry set up an electronic trading mechanism for faster movement of teas. Based on their suggestions, ITA is currently in talks with IT consultancy firms to launch the electronic system as soon as possible.”

However, he added that the system could be introduced only after its financial implications are considered.

“If the system is cost effective, industry will come forward to assist the project. ITA is therefore seeking the software firms’ views on the issue,” he said.

A special committee has been set up under the aegis of the association to formulate the necessary rules and regulations on how the system will work. The committee comprises members from both producers as well as leading tea brokers.

“The electronic trading (or auction) will not infringe upon the traditional auction system,” Bajoria clarified. The existing one run by Calcutta Tea Traders Association (CTTA) will continue to function. Each auction will function independently of the other and on different dates.

The electronic trading will be console-based, whereby the price of tea on sale will be displayed on a screen for about 10 minutes. The system, which replaces the traditional human-oriented auctioning, will enable the entire lot to be sold off in one go.

The ITA chairman said that kick-starting reforms in auctions were essential to bring back confidence in the system and maintain its relevance as an efficient and fair mechanism for price discovery.

In fact, the commerce ministry had also commissioned an in-depth study on the primary marketing of tea that sought to identify the constraints and ways to improve the process of price discovery. The Centre had followed up the study with a report on the post-auction supply chain tracing the movement of teas from the auction to the retail end.

The ITA chairman said while tea prices did not rise this year, production was also low following the heavy rains in north India. “In this situation it has become extremely important for the industry to market its product in a cost effective manner for survival,” he added.

   

 
 
MITSUBISHI CHEMICALS PUTS FAITH IN HALDIA 
 
 
AMIT CHAKRABORTY
 
Haldia, Aug. 6: 
MCC PTA India Corp, a subsidiary of Mitsubishi Chemicals Corporation, has decided to invest $ 2 million to increase the capacity of its purified terephthalic acid (PTA) plant here despite suffering losses in the first two years of operations,

The 3.5-lakh tonne PTA plant on the bank of the Hooghly set up with an investment of Rs 1,475 crore had been operating at 100 per cent capacity since it went on-stream in April 2000. But the plant failed to make any profit because of the global oversupply situation and market volatility. Nevertheless the company grossed a turnover of Rs 1,000 crore for the year ended December 2001 and exports were around Rs 250 crore.

PTA is used in the manufacture of man-made fibres and pet bottles.

Managing director Takaharu Fukumoto however refused to divulge the extent of the loss, saying there was no compulsion to make it public as it was a private limited company.

Fukumoto, who dubbed MCC PTA a “Bengali company’’ with a “vision to be a premium company in India in the long run’’ said the expansion of capacity would increase its competitiveness.

The capacity expansion will be through de-bottlenecking and adjustment of the existing facility expected to begin later this month, Fukumoto said. He hoped that net sales at the end of the current year would be Rs 1,100 crore, inclusive of the proceeds from additional production in the remaining four months.

Claiming that the plant was producing the “cleanest PTA in the world,’’ Fukumoto said he was optimistic that polyester producers in the country would come to appreciate high technology and the “virtue of our product would definitely become essential to them’’.

Director marketing Shoto Goda said the global markets had showed significant recovery during the first half of the year. But the market volatility again had a depressing effect since the beginning of August.

MCC of Japan, the promoter of MCC PTA India, has a 66 per cent stake in the company which has a paid-up capital of Rs 613 crore. While the West Bengal Industrial Development Corporation has a token presence with 5 per cent, the balance is contributed by Mitsubishi Corporation with 9 per cent, Nissho Iwai 8 per cent, Tomen Corporation and Marubeni 5 per cent each, and Sumikin Bussan Corporation 2 per cent.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.71	HK $1	Rs.  6.15*
UK £1	Rs. 75.46	SW Fr 1	Rs. 32.25*
Euro	Rs. 47.19	Sing $1	Rs. 27.20*
Yen 100	Rs. 40.34	Aus $1	Rs. 25.35*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5145	Gold Std (10 gm)Rs. 5080
Gold 22 carat	Rs. 4860	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7925	Silver (Kg)	Rs. 7975
Silver portion	Rs. 8025	Silver portion	   NA

Stock Indices

Sensex		3023.26		+11.91
BSE-100		1522.65		+ 8.57
S&P CNX Nifty	 966.65		+ 3.40
Calcutta	 110.76		+ 0.80
Skindia GDR	 454.84		- 7.46
   
 

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