Tata breaks silence on troubles
Bombay Dyeing weighs second buyback
Merger plan for VSNL, Tata Teleservices
Sebi cue led to Ferguson raids
Telco to scale Chinese wall with Indica
Gail earmarks Rs 500 cr for HPL
Unit Trust sells Hindustan Bajaj stake
Bengal finds place on Infosys second list
Court order puts jute industry in the dock
Foreign Exchange, Bullion, Stock Indices

Mumbai, Aug. 20: 
It’s not often that Ratan Tata retreats into the shadows when the company he steers is buffeted by a barrage of charges that leave scars of mistrust.

But when the man stepped out today to clear the air on everything that’s troubled his group in the past few weeks, he was more than willing to clasp the hot potatoes. “I’m glad you referred to Tata Finance Ltd (TFL),” he told shareholder at VSNL’s annual general meeting.

However, he did show signs of unease at the fact that there was too much of an attempt to dredge out dirt. “There is a concerted effort to get bad news from somewhere,” he said in a statement as loaded as the disputes.

And, then came the flurry of facts and figures to fortify denials. “No Tata Finance fixed deposit holder or stakeholder has suffered a loss. We have pumped a sum of Rs 500-700 crore into the company. We have put in the money because it was our moral responsibility.”

The Tata chief made a clean breast of the controversies engulfing his group when he fielded questions from scribes on the sidelines of the VSNL meeting.

Rebutting imputations made by former TFL managing director Dilip Pendse, he denied knowledge of investment decisions taken by Tata Finance, particularly those of its subsidiary, Niskalp Investments.

Tata claimed he came to know of TFL’s financial funk in April 2001, from Pendse, who called him in Dubai to talk about the problem.

“It is absolutely untrue that I was consulted by Pendse and I was not involved in TFL and its issues,” Tata asserted. “The first time I was informed was when Pendse called me up in Dubai in April last year. If I was involved why would he contact me?” he said. The closing argument: “All issues will now be settled in court.”

Pendse had put in his papers in February 2001 and relieved in May 2001. He filed an affidavit on August 16 in the Mumbai high court, arguing he was not the only one responsible for the string of losses suffered by TFL and Niskalp. He claimed the directors on the board of the two companies were aware of the investments all along.

The Tatas accused Pendse of cheating and criminal breach of trust, causing a Rs 424-crore loss to Tata Finance.

On the controversial VSNL board meeting that cleared the bulge-bracket Rs 1,200-crore investment in Tata Teleservices, Tata told shareholders: “I would not like to add to the controversy. The question of this investment did not require the approval of the government.”

“The general view was that there was no dissent at the meeting. Still, the government-appointed nominee on the board was of the view that he had disagreed. We have recorded his views later,” he added.


Mumbai, Aug. 20: 
Nusli Wadia today took yet another move to ramp up his holding in Bombay Dyeing and Manufacturing Company Ltd when the company announced a board meet on August 28 to discuss a proposal for buying back its shares.

This is the second buyback by Wadia in the company. The earlier one, that commenced on September 7 last year and ended earlier this year, saw Wadia’s holding in Bombay Dyeing rise to near 43 per cent from 41 per cent in June last year.

The announcement led to the Bombay Dyeing scrip flaring up by close to 8 per cent on the stock exchanges today. Opening at Rs 48.35 on the Bombay Stock Exchange (BSE), the share rose to an intra-day high of Rs 53, before it finished at Rs 51.95. The counter saw 1105 trades with 1.25 lakh shares being transacted. This yielded a total turnover of Rs 64.39 lakh.

Prior to the first buyback, the promoters of Bombay Dyeing had purchased over 18.98 lakh shares early last year. The shares were bought at different prices—the highest being Rs 61 per share and the lowest rate was Rs 34 apiece.

The first buyback, at the rate of Rs 60 per share, was prompted by the aggressive overtures of Calcutta-based jute baron Arun Bajoria who had then cornered around 13.5 per cent stake in Bombay Dyeing.

Market circles now expect Bombay Dyeing to offer a price of up to Rs 50 per share for its second buyback proposal.

In September, Bombay Dyeing had said that in accordance with the various provisions, the maximum amount allowed to be utilised for implementing the buyback programme was Rs 143.40 crore, representing 25 per cent of the paid-up capital and free reserves.

The company then said that it intended to buy up to a limit of 25 per cent of the total existing share capital of the company, which is up to a limit of 1,02,50,457 equity shares.

According to the company’s quarterly filing with the BSE in June this year, the promoters holding in the company stands at 42.68 per cent while the institutional investors hold 17.66 per cent and the public 27.3 per cent.


Mumbai, Aug. 20: 
Ratan Tata today said it was a matter of time before Videsh Sanchar Nigam (VSNL) and Tata Teleservices (TTL) are folded into a single entity.

The chairman of the Rs 47,000-crore group was addressing shareholders of VSNL at its first annual general meeting after the Tatas acquired the company this year.

Talking about the telecom strategy, Tata said a large band of shareholders are common to Tata Tele and VSNL.

“The two companies have common interests. TTL could have implemented an international long distance (ILD) project on its own. It did not. VSNL would love to have basic operations to get its own subscribers.” Therefore, he said, they would complement each other’s business and help in expansion.

Tata was responding to shareholders who had raised several questions on VSNL’s planned Rs 1,200-crore infusion in TTL — the group’s fledgling basic phone arm that services Andhra Pradesh and Maharashtra, where it recently acquired Hughes Tele.com.

“As and when we make this investment, it is our intention that representatives of VSNL will go on the board of TTL. Then, one day, they will merge into one company. That remains our eventual desire,” Tata added.

The main objective would be to widen the scope of services at a time when international call rates have been tumbling. “Otherwise, the company will die as an ILD operator,” Tata said in response to a shareholder’s query.

The Tatas had faced a barrage of criticism when they decided to commit Rs 1200 crore worth of VSNL’s reserves for investment in Tata Teleservices. The move drew fire from Union communications minister Pramod Mahajan, and invited accusations of asset-stripping.

Critics had argued that it was improper to invest the funds in a company that was still finding its feet and, more important, had not got its valuation done so far. The VSNL board had proposed to invest in the shares of TTL, which remains an unlisted company, at par.

The Tatas, on their part, mounted a stout defence of the decision, contending VSNL had itself applied for basic telephony licence, but the request was turned down. Also, in the liberalised era, when more than three players were vying for a slice of the international telephone pie, the winner in the business would ultimately be the company that controls the end customer.

VSNL, the Tatas said, had only MTNL and BSNL as customers, and they controlled the entire market. It was, therefore, logical for it to get subscribers by forging an alliance with a basic phone service company.

Meanwhile, VSNL’s efforts to diversify into STD calls are gradually taking off. The company has already invested Rs 500 crore of the Rs 1,300 crore it intends to pump into the whole project. Meanwhile, it has collected $ 85 million from the fallen WorldCom and would able to recover the rest of the dues, Tata said.


New Delhi, Aug. 20: 
The Department of Company Affairs (DCA) had received vital information from the Securities and Exchange board of India (Sebi) that some documents relating to l’affaire Tata Finance Ltd in the possession of accountancy firm AF Ferguson & Company had been tampered with, a top DCA official told The Telegraph.

This led to yesterday’s raid on the Ferguson office in Mumbai. The official emphasised that the DCA had no plans to undertake a similar operation at TFL’s offices.

Stating that the search and seizure operations were still on, the official said the result of the search action is still to come and there can be no speculation on its outcome right now. He did not give any time frame for the search operations but said it would not take long. The DCA is in touch with Tata officials, the official said.

Sources said a day after the Registrar of Companies, Mumbai, procured a warrant from a Mumbai court to search the Ferguson premises, the DCA secretary met a Tata Industries director in Delhi.

On its part, the DCA has came out with a press note on the subject, which said the six-member team that has reached Mumbai to ‘look into the matter’ is authorised to seize any documents that might be necessary to conduct a probe. The official refused to put a tag on the number of documents seized so far.

The search and seizure petition was filed under Section 234A on Sunday afternoon, following reports received by DCA from Sebi that papers relating to Tata Finance were being shredded by Ferguson & company in their offices in Mumbai.

According to Tata insiders, the DCA had asked for the controversial report that Ferguson had prepared on Tata Finance that it later withdrew after the Tatas raised objections to certain observations made by YM Kale, the auditor who quit the firm amidst controversy two weeks ago.


Calcutta, Aug. 20: 
Tata Engineering and Locomotive Company (Telco) plans to take Chinese roads by storm with its prima donna Indica. It is in talks with Brilliance to set up a joint venture in China to manufacture Indica in that country.

Sources said Telco is keen on setting up a manufacturing unit in China as it has vast potential for small cars.

“China is a country which is certain to generate a great demand for small cars in the days to come. Indica, which already has a strong presence here, will be able to attract Chinese customers as well due to its unique features,” they added.

A senior Telco executive further pointed out that although Indica is a small car, it has lot of space, not available in most of the offerings in the same segment. “Since our car offers both power and space, it has great potential to grow in a country like China,” he said.

When asked about the development, the Telco spokesperson said it is too premature to comment anything on the matter since “talks have not reached any substantive level.”

“We are definitely looking at the opportunities in China. But there are certain conditions that we have to go by if we want to set up shop there,” he said.

One of the major conditions for any auto manufacturer wanting to set up operations in China is that it has to do so through a joint venture with a local partner. Brilliance, sources said, has shown interest to partner with Telco for Indica. “But all the pros and cons need to be properly judged before entering into any relationship as we have a very long-term plan for China,” sources said.

What has perhaps provided the impetus behind the talks is that Brilliance is in the process of having an association with the UK auto manufacturer Rover.

“Telco is also in talks with Rover to set up manufacturing bases in Europe where the latter has a very strong presence. This Rover connection might help, in the process, have partnership with Brilliance as well,” they added. “The Indica is well tested in the varied environs of India. That is certainly going to increase our acceptability in China as well,” they said.

Sources however noted that exporting Indica as completely knocked down (CKD) unit to China cannot be of much use because of the duty structure prevailing in that country.


Calcutta, Aug. 20: 
Gail (India) Limited will invest Rs 500 crore in Haldia Petrochemicals (HPL) — Rs 200 crore to acquire a 10 per cent stake and Rs 300 crore in a marketing tie-up that will help the project sell polymers.

“Gail is working on a marketing plan under which it will sell HPL’s polymers. We hope to clinch the deal by September. I am also talking to financial institutions on debt restructuring,” HPL chairman Tarun Das said.

Gail has set up a gas cracker plant in Pata (Uttar Pradesh) at an investment of Rs 2,500 crore with a capacity to churn out 300,000 tonnes of ethylene every year. Its downstream units include a high-density polyethylene (HDPE) production unit with a capacity of 1,00,000 tpa and a linear low-density polyethylene (LLDPE)/HDPE swing plant that can produce 1,60,000 tpa.

Gail had been keen on a marketing tie-up with Haldia Petro for LLDPE and HDPE. The idea was to create a common pool of the two products for sale in domestic and overseas markets. HPL produces 2,20,000 tonnes of HDPE and 2,50,000 tonnes of LLDPE/HDPE annually.

Das said the financial health of the Rs 5,170-crore company has improved over the past two months; its earnings before depreciation, interest and taxes stand at Rs 30 crore. One of the things that have helped recovery is the falling cost of feedstock. “We are procuring naphtha from local and foreign companies at cheaper rates. This is helping us reduce our expenditure.”

According to Das, three international companies — two from West Asia and one based in Europe — are ready to supply naphtha at competitive rates. “They have also agreed to give us credit. Talks are on,” he said.

Lenders’ meeting

Bankers and the financial institutions (FIs) led by Industrial Development Bank of India (IDBI) today asked HPL promoters whether they would be able to pay the interest for the three quarters by the end of next month.

The meeting was attended by Jawhar Sircar, Bengal commerce and industry secretary, Purnendu Chatterjee of The Chatterjee Group and the HPL chairman. Lenders have long been pressing for a meeting to discuss the health of HPL with its promoters. “This is basically a follow-up meeting,” they added.

Asked if the company will be able to fork out the Rs 350 crore in interest by September 30, the promoters promised the bankers that it would be cleared within that time.

“The promoters informed us about the recent developments on Gail’s possible entry. But the bankers said there has been some dilly-dallying for some time over bringing in the fourth equity partner. They want the issue to be sorted out in a time-frame.”

The promoters asked banks to provide additional working capital to run the company at its installed capacity.


Mumbai, Aug. 20: 
As peace-makers struggle to heal rifts in the Bajaj brood, two holding firms of the group have acquired shares worth 9.5 per cent of Bajaj Hindustan’s equity in a deal with Unit Trust of India (UTI).

Bachraj & Company Pvt Ltd and Jamnalal Sons Pvt Ltd snapped up the shares by paying the mutual fund major an attractive price of Rs 95 per share. The deal comes at a time when mediators like Sharad Pawar and family friend D. S. Mehta have not been able to bring about a truce.

UTI is understood to have sold over 8.29 lakh shares of Bajaj Hindustan. Of this, 4.50 lakh shares have been sold to Bachraj and over 3.79 lakh to Jamnalal Sons. The price represents an attractive premium of 66 per cent on the closing price (Rs 57) of the share on BSE today.

Shishir Bajaj, who owns Bajaj Hindustan, had earlier indicated he wants to break away from the group, while Rahul Bajaj and cousins — Shekhar, Madhur and Niraj — said they would prefer to stay together.

Sources say the premium paid by the Bajaj firms is significant given the differences on valuation believed to have cropped up between Rahul and Shishir Bajaj. Reports suggest the Rahul Bajaj faction is ready to pay around Rs 350 per share to Shishir for his 6 per cent stake in Bajaj Hindustan — an offer rejected by Shishir.

It is not clear whether the negotiated price was the outcome of valuation done by Khandwala Securities, which has been asked to value the properties of the family.

Details of the deal between UTI and the two holding companies were not available, but sources close to Shishir said it was done with the ‘full knowledge’ of family members. Corporate watchers say the move could be an effort on the part of the family to ensure the exchange of stake is equitable once the split is formalised.

Bajaj Auto chief Rahul Bajaj was not available for comment. Shishir Bajaj’s office declined to speak on the deal.

The promoters hold close to 51 per cent in Bajaj Hindustan, institutions 23.74 per cent and others 25.61 per cent. Other companies in Shishir’s fold include Bajaj Consumer Care and Deccan Ayurvedashram Pharmacy.


Calcutta, Aug. 20: 
Software major Infosys Technologies Limited is likely to invest in Bengal in its next phase of expansion.

“Bengal has certain advantages in terms of talent. We will definitely consider the state when we look at a new set of expansions,” Infosys chairman and chief mentor N. R. Narayana Murthy said.

However, he said Infosys would undertake the next round of expansion only after the economy improves. “The economy is certainly not at its best right now and we will have to wait till the situation improves.”

“I met West Bengal chief minister Buddhadeb Bhattacharjee in the morning. We discussed IT and ITES (IT-enabled services) policies and he requested me to invest in the state. I have told him that Bengal is on my mind and I will definitely look into it. The quantum of investment will be decided later,” he told reporters here today.

The Infosys chairman was in the city to address members of the Confederation of Indian Industry (CII) on ‘Making India globally competitive’.

Narayana Murthy today said he was confident of recording a Rs 3,108-3,195 crore income from sales of software services during the current financial year.

“Our cash position (of slightly less than Rs 1,000 crore) is such that we can run the company for eight to nine months without generating any revenue. Our chief executive officer Nandan Nilekani has given estimates on what will be our topline and bottomlines during the current financial year and I think we will live up to it,” he said.

The Bangalore-based Nasdaq-listed company’s revenue for April-June rose to Rs 764.62 crore from Rs 612.52 crore, a year-on-year growth of 24.83 per cent.

“There is tremendous need for all top 500 companies of the country to sit and chalk out strategies to make industry stronger so that it can sustain such a scenario in the future. I am worried that the future will be a bit bleak if a strategy was not evolved,” Murthy said.

He also urged the industrialists present at the meeting to develop a global brand from the country. “There is no global brand from India. We should develop such a brand immediately,” he said.

Murthy, whose company owed its success to the economic reforms initiated by the then Prime Minister Narasimha Rao and finance minister Manmohan Singh said, “Since inception in 1981 till 1991, we simply could not grow and in fact were floundering with a turnover of around Rs 2 crore.”

Murthy said all Indian companies could become globally competitive if their CEOs followed the principle of PSPD (predictability, sustainability, profitability and derisking).


Calcutta, Aug. 20: 
The Calcutta High Court today dealt a major blow to the jute industry, dismissing its writ challenging the Centre’s decision to amend the Jute Packaging Materials Act.

The amendment of the Act earlier this year paved the way for the use of synthetic material for packaging food grains and sugar. But to offer the jute industry a degree of protection, the Centre set limits on the use of synthetic packaging material.

For food grains, use of synthetic packaging was capped at 20 per cent, whereas for sugar, the threshold was set at 25 per cent. These are to be further relaxed in a phased manner. From July next year, the limits are being doubled.

The jute industry is upset with today’s development, as it had hoped to defer the amendment through court cases. The immediate impact is likely to be a sharp fall in jute prices, which would affect both mill owners and farmers.

Raw jute is currently trading at around the minimum support price (MSP) of Rs 850 per quintal. In some pockets, raw jute price has already fallen below the MSP, or the pre-determined price at which the government procures the commodity.

“Discounting has already begun in the sacking and hessian markets. Prices of both may crash in a week,” said Sanjay Kajaria, former chairman of the Indian Jute Mills Association.

Hessian is trading at Rs 31,000 per tonne, whereas sacking prices are hovering around Rs 22,000. A discount of Rs 500 per tonne is being offered on both by traders.

“The bumper crop of 115 lakh bales this year is worsening the situation. The glut in the market is weakening prices,” Kajaria added.

Production this year was 10 lakh bales more than last year. In addition, about 7 to 8 lakh bales of cheap jute would be imported from Bangladesh.

“On the other hand, consumption will fall due to the amendment of the Act. The industry estimates consumption to be around 82 lakh bales this year compared with 91 lakh bales last year,” Kajaria added.

The jute industry feels the protection offered by the Centre is insignificant. “There is no way the government can measure the use of synthetic material. So, it is impossible to enforce the limits,” said Ghanshyam Sarda.

“Once the floodgates are opened, it will be impossible to keep a tab on synthetic materials, which, despite being a threat to environment, are much cheaper,” he added.



Foreign Exchange

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Calcutta			Bombay

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