Holcim drawing up return route
Forex reserves touch new high at $ 60 bn
Rising labour costs prompt tea planters to seek aid
Consultants to help IBP restructure
Labour unrest brews at Gopalpur port
Award for Simputer team

 
 
HOLCIM DRAWING UP RETURN ROUTE 
 
 
A STAFF REPORTER
 
Calcutta, Aug. 10: 
Swiss cement major Holcim Ltd intends to return to India. Holcim—formerly known as Holderbank—broke up with its Indian partners recently.

In March this year, Holcim sold off its 44 per cent stake in Kalyanpur Cements to the Sinha family, the Indian promoters of the company. Kalyanpur is the only company in India, in which Holcim had investments.

A spokesperson for Holcim said: “India remains one of our focus markets for future investments. Holcim continues to look at projects in India.” The Holcim official, however, refused to indicate any time frame for the company’s return to India.

It is still not clear whether the break-up with Kalyanpur will make it any easier for Holcim to invest in India. It would have certainly had to obtain Kalyanpur’s clearance to invest in other companies in India had it not sold off the shares in its lone Indian venture.

But there is another legal view that despite the break-up, Holcim may require Kalyanpur’s ‘no-objection certificate’ to get investment plans in India approved by the Foreign Investment Promotion Board (FIPB). A merchant banker said: “What we can say with certainty is obtaining Kalyanpur’s clearance would not be easy.”

Holcim is understood to have sold its stake in Kalyanpur for a token consideration of Re 1. Neither Holcim nor the Sinhas would comment on the consideration paid for the acquisition of the Swiss cement major’s 44 per cent stake in Kalyanpur.

The company is in dire straits for quite some time. Its losses exceed Rs 200 crore, and it is under the administrative supervision of the Board for Industrial and Financial Reconstruction (BIFR).

Lafarge and Italcementi are the only foreign companies operating in the Indian cement market now. Besides Holcim, Cemex is said to be on the look out for investment opportunities in India.

In the past Blue Circle Plc of the UK had planned to enter the Indian market. It had even examined some properties in central India, but withdrew. Eventually, Lafarge acquired Blue Circle globally.

Holcim is believed to be keen on picking up stake in Larsen & Toubro’s cement business, when the latter said it would de-merge its cement and engineering businesses into separate companies.

“Grasim having entered the picture with a substantial stake in Larsen & Toubro, any deal with foreign cement companies looks unlikely,” merchant bankers pointed out.

Meanwhile, Holcim continues to have representative office in India, which, besides keeping an eye on developments in the market, offers technical consultancy for setting up cement plants.

   

 
 
FOREX RESERVES TOUCH NEW HIGH AT $ 60 BN 
 
 
OUR CORRESPONDENT
 
Mumbai, Aug. 10: 
Maintaining its record shattering trend, the country’s forex reserves today surpassed yet another milestone of $ 60 billion when reserves for the week ended August 2 were put at $ 60,148 million.

The new high comes after a period of five months. It may be recalled that in February 15 this year, the country’s forex reserves had breached the $ 50 billion limit and touched $ 50,208 million. Since then the reserves have maintained their upward climb, touching new highs largely due to mopping up of dollars by the Reserve bank of India (RBI) and high level of inflows, particularly from foreign institutional investors (FIIs).

Forex circles attributed this $ 60 billion level to an increase in export remittances. This has come at a time when the Indian rupee has also appreciated against the US greenback to 48.65/66 per dollar and the US dollar has slumped in the overseas market. It is now believed that the dollar’s decline has left the rupee undervalued by more than 4 per cent in trade-weighted terms.

If export remittances have led to the inflow of dollars, foreign direct investment (FDI) too displayed a positive trend. According to recent data released by the industry ministry, the FDI inflow rose by 87 per cent to $ 501 million (net of ADRs/GDRs) in May 2002 against $ 268 million in the same month last year. The cumulative FDI inflow during January-May is put at $ 1.89 billion.

According to the weekly statistical supplement released by the central bank today, for the week ended August 2, forex reserves rose $ 281 million to reach $ 60,148 million. In the previous week, the reserves had risen by $ 261 million.

The foreign currency assets rose by $ 360 million to $ 56,887 million, RBI added. Gold reserves declined by $ 82 million to $ 3,248 million due to revaluation while special drawing rights grew by $ 3 million to $ 13 million.

RBI added that in the week, loans and advances to the Centre increased by Rs 5,085 crore to Rs 13,281 crore while that to the state governments decreased by Rs 752 crore at Rs 3,660 crore.

Aggregate deposits with the scheduled commercial banks for the fortnight ended July 26 increased by Rs 7,892 crore (0.7 per cent) to Rs 12,06,996 crore. Food credit in the fortnight declined by Rs 386 crore to Rs 59,077 crore while non-food credit was up by Rs 1,600 crore to Rs 5,94,415 crore.

   

 
 
RISING LABOUR COSTS PROMPT TEA PLANTERS TO SEEK AID 
 
 
A STAFF REPORTER
 
Calcutta, Aug. 10: 
The Indian tea industry has approached the Union finance ministry seeking financial assistance to meet the increasing labour costs.

The Indian Tea Association (ITA), the apex body of the planters, has already sent a formal proposal to the finance ministry. The proposal has been routed through the Union commerce ministry.

Tea industry officials said that declining prices in the international and domestic markets and spiralling costs have hurled the Indian tea industry into an unprecedented crisis.

Dwindling margins have forced the industry to desperately hunt for areas of strict cost control since it is being increasingly felt that competitiveness of Indian tea in the domestic as well as global markets, to a large extent, depends on the corrective measures taken to trim expenses on inputs.

The industry feels that while many of the cost components are beyond control because of the current administered price regime or central and state imposts, there are certain heads of production expenses that need to be addressed immediately. One such area of prime concern is labour cost which constitutes as much as 50-55 per cent of production expenses.

Industry officials said, “The Accenture study commissioned by the Tea Board and the ministry of commerce have also suggested the need for an immediate review of the provisions of the Plantation Labour (PL) Act in respect of its welfare provisions and their impact on production costs.”

The tea industry provides subsidised ration to the workers. Under the PL Act, each plantation is required to provide free medical facilities to a worker and his/her family.

According to the PL rules, each plantation must have a garden hospital with a medical officer and adequate paramedical staff.

Every plantation has to provide a labour quarter to the workers. The tea industry in the north-east is required to provide free fuel to all employees resident on the estate.

“The industry has to bear all these costs. With these huge costs the sustainability of the Indian tea industry has become questionable. Therefore the industry needs immediate funds,” the industry officials said.

   

 
 
CONSULTANTS TO HELP IBP RESTRUCTURE 
 
 
ANIEK PAUL
 
Calcutta, Aug. 10: 
IBP Company Ltd, the petroleum marketing major, has appointed a couple of international consultants to advice it on restructuring its two non-core business groups: chemicals and engineering.

Whereas for the engineering division it has asked KPMG for suggestions, for the relatively larger chemicals business, it has approached Ernst & Young for advice.

Senior officials of IBP said, “The two consultants would look into every conceivable way the performance of the two business groups can be improved. The point is to ensure that they add value to the company.” At present both the chemicals and engineering divisions are loss-making.

In the past, the management petroleum marketing major had considered divesting the two businesses, but later dropped the idea. The plan to sell off the two businesses occurred when the government was selling 33.58 per cent of IBP’s shares.

The then IBP management had felt, there would be no interest among bidders for the two non-core business groups. The management’s view was selling them off would make IBP a leaner and a more focused company.

But the IBP management reversed its opinion later, and the government’s 33.58 per cent stake in IBP was divested to Indian Oil Corporation, without the company having sold its non-core businesses.

Instead of selling off the two businesses, the IBP management took a slew of measures, including reduction of manpower to improve the operational efficiency of the chemicals and engineering divisions.

However, the two businesses are still in the red. In the last financial year, the chemicals business posted a loss of Rs 23.71 crore on a turnover of Rs 109.63 crore. The loss increased by over 50 per cent from Rs 15.76 crore, while turnover slipped by 11.5 per cent.

The engineering division posted a loss of Rs 7.28 crore on sales of Rs 11.27 crore in 2001-02. The division’s sales declined sharply compared with the previous year. The loss, too, was significantly higher than 2000-01.

The results for 2001-02 were not strictly comparable with the previous year because the company had provided for expenditure on a voluntary retirement scheme (VRS). IBP spent Rs 17.44 crore for VRS in the chemicals division and Rs 3.69 crore for the same in the engineering division.

IBP’s chemicals division produces explosives, detonators, fuses and boosters. The engineering division is a leading manufacturer of cryogenic containers.

   

 
 
LABOUR UNREST BREWS AT GOPALPUR PORT 
 
 
SIB KUMAR DAS
 
Berhampur, Aug. 10: 
The Gopalpur port area is headed for a major labour unrest unless the state government clearly declares its stand on the port’s future.

With the port’s cargo handling operations facing the threat of closure, the port’s 4,000-strong workforce may lose its livelihood, union leader Chittaranjan Dash said, leading to labour unrest which may drive away private parties interested in taking over operations of the loss-making port.

The port, run by the state government, started operations two decades back as a seasonal port, with the aim of becoming a major all-season port. Usually, its cargo handling operations start from November 15 and continue till May 15. But till date, the port has not been able to break even. Since the port was incurring heavy losses, some state government circles suggested closing down its cargo handling operations this year.

One of Gopalpur port’s major customers happens to be Indian Rare Earths Ltd, which has one of its units near the port at Matikhalo. However, the cargo exported by IRE Ltd through the Gopalpur port has gone down in the last few years, leading to a fall in its income.

On July 9, state chief secretary D. P. Bagchi said that since there was hardly any scope of export traffic from IRE Ltd this year and the port needs high budgetary support to keep it operational, it may not be opened for traffic in the year.

Dash claimed although the bureaucracy was spreading misinformation about the future of the port, the chief minister had not yet given any indication that the port would be closed down. In fact, chief minister Naveen Patnaik had convened a meeting on the Gopalpur and Dharmara ports on June 14, but no decision to shut down the port was taken, he said. At the meeting, the chief minister had suggested handing over the port to Adani Exports Private Ltd by October, which would ensure its future operations.

Adani Exports has already signed an MoU with the state government for the development of the Gopalpur Port. Dash feels the present impasse will cause great problems, as no private party will be interested in taking over the port unless it is active. Moreover, if a labour unrest brews up due to the fear of a possible closure of operations this year, then Adani Exports may do a rethink on it plans to assume charge at the port, he added.

   

 
 
AWARD FOR SIMPUTER TEAM 
 
 
OUR SPECIAL CORRESPONDENT
 
New Delhi Aug. 10: 
The team that developed Simputer—the poor man’s computer—today received the first Dewang Mehta award for innovation in information technology. The Simputer is a low cost hand-held device with multiple connectivity options based on free software.

The award has been instituted by the department of Information Technology in the ministry of communications and IT to commemorate the contribution of Dewang Mehta to the IT industry. The award will be given to those whose innovation has the potential to make a significant impact on national development and bring fame to the country.

Mehta, who died last April while on a trip to Australia, was one of the strongest proponents of the India Inc brand equity in IT. He was the first executive director and then president of Nasscom spanning over a decade.

Union minister for communications and information technology Pramod Mahajan, who conferred the award, said that he would look into the Simputer team’s demand for reduction in tax.

The Simputer project was conceived by seven trustees drawn from the Faculty of Computer Science and Automation at the Indian Institute of Science and Encore Software Limited (formerly Ncore Technologies). The recipient of the award will get Rs 5 lakh.

The Simputer can have a wide range of applications some of which are—micro-banking, data collection, internet access, agricultural information, the school laboratory, the kiosk simputer, smart card and simputer, general purpose citizen’s ID card, driving licence, land records, income tax records, passport, bank passbook and digital cash. Simputer also has text-to-speech capability in a variety of Indian languages.

The Simputer team consists of Vinay L. Deshpande, managing trustee, co-founder, chairman and CEO of Encore Software Limited, Bangalore, Vijay Chandru from Indian Institute of Science, Shashank Garg from Encore Software Limited, Ramesh Hariharan from Indian Institute of Science, Swami Manohar from Indian Institute of Science, Mark R. Mathias from Encore Software Limited and V. Vinay from Indian Institute of Science.

   
 

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