Heat on all Tata Fin auditors
Indian Oil renews offer for HPL
Zee looks beyond AOL for alliance
Insurance cover comes free with toothpaste
Marketing gurus like it sticky & sweaty
Indian Oil rules out IBP merger
Subsidiary to be set up in Lanka
States, Centre slug it out over transfer of funds
Zenith to provide solutions to rural banks
Foreign Exchange, Bullion, Stock Indices

 
 
HEAT ON ALL TATA FIN AUDITORS 
 
 
OUR CORRESPONDENT
 
New Delhi, Aug 21: 
In a suo motu move, the Institute of Chartered Accountants of India (ICAI) has asked all chartered accountants connected with the Ferguson report on Tata Finance (TFL) to furnish all relevant information in their possession.

The accountants — who are all licensed to practise by the ICAI — will have to respond to the request in their individual capacities as members of the institute.

The institute has quasi-judicial powers over the conduct of the members of the body. However, the current by-laws of the body do not oblige members to provide such information till disciplinary action is initiated in a case.

The institute, however, does not plan to take any disciplinary measures till it knows the ground realities. ICAI does not have the power to charge, or prosecute a firm but can investigate individual members.

Once its is proven that the auditor is guilty, it can recommend to the high court the permanent cancellation of the accountant’s licence, which is normally accepted.

ICAI president Ashok Chandak told reporters on the sidelines of a Ficci seminar on corporate governance that the members had been issued letters seeking this information about a week ago. However, the responses are yet to come in.

Chandak admitted that although the institute has asked for information, it is not the duty of the member to respond to the request. In fact, ICAI wants the Chartered Accountants Act amended to grant it such powers.

Chandak said if ICAI concludes that there is a case against a member based on complaints from other regulatory bodies like DCA, Sebi or even citizens, then it can start disciplinary proceedings and seek evidence. It has the power akin to any court to do so, and seek facts not only from chartered accountants but others as well.

Chandak admitted the institute’s action could be challenged, but implied ICAI had decided to take a pro-active stand on such issues. It may be recalled that ICAI had requested DCA to seek information from both TFL and Ferguson since it said it did not have the powers to do so.

DCA has already got the Ferguson report and initiated a search operation at the chartered accountant firm’s premises on the basis of a tip-off from Sebi that certain documents relating to TFL were being shredded.

Chandak said while DCA’s action and probe against TFL and Ferguson will look into any violation of the Companies Act, the domain of ICAI is to look into the violation of the code of ethics of the institute or professional misconduct, more specifically, any gross negligence on the part of a member of the institute.

Ferguson submitted the controversial report to the Tatas in April, highlighting a series of deals involving group companies. The report said the companies had traded in each others’ shares in a manner that helped some of them report higher profits from treasury operations, or dividend income.

It also said that some of them routed money to those buying the shares through inter-corporate deposits. The report was withdrawn in the second week of August, allegedly under pressure from the Tatas.

   

 
 
INDIAN OIL RENEWS OFFER FOR HPL 
 
 
A STAFF REPORTER
 
Calcutta, Aug 21: 
Frosty ties between Indian Oil Corporation (IOC) and Bengal over Haldia Petrochemicals (HPL) showed signs of a thaw today as they sat across the table to restore communication channels.

The dialogue on investment in HPL snapped when IOC insisted on a 50 per cent stake in the project earlier this year.

Indian Oil chief M. S. Ramachandran, who met chief minister Buddhadeb Bhattacharjee for the first time since taking charge of the Fortune 500 firm here today, said HPL could be given higher naphtha credit against securitisation of sale proceeds.

At present, the credit is Rs 300 crore every month, but HPL wants that amount raised by Rs 100 crore. Ramachandran said he is even open to the idea of re-working naphtha pricing formula.

The IOC chief also held talks with state commerce and industry minister Nirupam Sen in his one-hour pow-wow at the Writer’s. “We have clarified to state government our position regarding investment in HPL,” he told reporters after emerging from the discussions.

Indian Oil, he said, would stick to its earlier proposal of a 26 per cent stake and management control in return for the funds that it would invest in the cash-strapped project. It also wants a 100 per cent naphtha-supply contract.

“We would not like other shareholders to hold more equity than us. We will like management control of HPL. After all, we do not want to be a portfolio investor, but a petrochemical company,” Ramachandran said.

IOC, keen on acquiring a majority in HPL provided its long overdue debt recast is completed, is ready to negotiate with the state government, Ramachandran said.

Authorities at Writer’s were silent on the talks, which also centred on a plan to ferry natural gas from Bangladesh to the state. “The state government has nothing to say at this point about HPL and IOC,” the chief minister said.

According to corporate watchers, having failed to bag IPCL, Indian Oil wants to clinch a deal with HPL to grab a sizeable chunk of the country’s petrochem business.

Sources say the state government will would have to choose between a politically correct decision to bring in IOC, or take a sound economical stand, like roping in the Hindujas or Reliance as HPL’s fourth equity partner.

Financial institutions and banks led by Industrial Development Bank of India want IOC to come in, a view that was articulated at the August 20 lenders’ meeting here.

Ramachandran said Gail (India) Limited’s decision to invest Rs 200 crore in the project will give it a breather. The Rs 5,170-crore HPL is saddled with a Rs 4,200-crore debt pile.

The company has been asking banks and FIs to restructure its loan by rescheduling repayment and waiving interest.

   

 
 
ZEE LOOKS BEYOND AOL FOR ALLIANCE 
 
 
OUR CORRESPONDENT
 
Mumbai, Aug. 21: 
Zee Telefilms’ planned strategic tieup with AOL Time Warner has been delayed because of US giant’s preoccupation with a business revamp.

Though a possible alliance between the two looks distant, sources in Zee were unfazed by the development. They said they were still hopeful of joining hands with an international strategic partner, few of whom have been spotted. Their identities are not known.

In the US, concerns about bad accounting and high debts have depressed the AOL Time Warner stock in recent months. It is now working on restructuring its online division.

Last year, Zee had announced it was in the look-out for a strategic partner to whom it would offer an equity stake in the company. This was part of the wide-ranging efforts to reap synergies and open up greater opportunities of distributing its products globally.

The partner was expected to bring value to Zee Telefilms, enabling it to tap new avenues for value creation and enhancement in the area of syndication, distribution or content creation for the international markets.

In its quest for a strategic partner, the company acquired controlling stakes in leading Punjabi language channel ETC Network and Padmalaya Telefilms, a house that specialises in animation.

Zee also entered into a tie-up last year with Turner International to jointly distribute each others’ channels.

It had zeroed in on three probables to whom it could divest a portion of its equity. They included AOL Time Warner, Vivendi Universal and Viacom. It was believed that AOL and Vivendi were serious contenders, and the winner would be known only in the last lap. Enam Financial Consultants and global merchant banker UBS Warburg were hired to look for an ally

   

 
 
INSURANCE COVER COMES FREE WITH TOOTHPASTE 
 
 
OUR CORRESPONDENT
 
Mumbai, Aug. 21: 
Toothpaste can not only ensure dental hygiene but also provide free insurance cover. Strange as it may seem, if you buy a 200 gm toothpaste, you get insurance cover worth Rs 25,000 absolutely free!

A fledgling toothpaste brand—Amar—has signed up with private sector insurer Tata AIG General Insurance in a bid to make its presence felt in the highly competitive Rs 2,500-crore toothpaste market dominated by two leading FMCGs—Colgate Palmolive (India) and Hindustan Lever Ltd.

Call it a sign of the lengths to which insurance companies are ready to go to push products, or an innovative way to shake up the toothpaste market, what has to be seen is how far the idea catches on.

“It’s all about securing life and preserving everlasting smiles,” proclaims Rasesh Mehta, the young CEO of the Rs 600-crore Shree Vardhaman Chemicals Ltd, which has launched the toothpaste. “Taking an insurance cover has never been so easy,” he said. “For decades, toothpaste manufacturers have had it easy with the conventional marketing gimmick of offering something more. In an age where positioning has cast a spell on brand identities, promotions crave for more attention.”

Mehta said every 200 gram pack of Amar toothpaste comes with a form. “The customer only has to fill in the form providing personal details and post it to us. We in turn, will send an acknowledgement, congratulating him on the insurance cover.”

The insurance cover comes at no extra cost. Amar toothpaste has been priced competitively at Rs 55 per pack. What’s more, if you think a cover of Rs 25,000 is a measly one, you can go in for a higher insurance cover. Simple: Just buy 12 packs and enjoy an insurance cover of Rs 3 lakh. The policy is valid for one year and comes into effect in case of the accidental death of the policyholder.

The Amar-Tata AIG tieup may throw light on the insurance sector too. Though the cover in the offer is confined to accidental death, in a broad perceptive it is felt that insurance will now be made available to those who gave little thought to it.

Shree Vardhaman Chemicals has been associated with the Tatas for more than 40 years, and is the distribution channel for Tata Salt and Tata Tea.

   

 
 
MARKETING GURUS LIKE IT STICKY & SWEATY 
 
 
OUR CORRESPONDENT
 
New Delhi, Aug 21: 
Marketing mavens are never short of acronyms to demystify the mysteries of marketing.

Trust the chief executives of some of India’s largest companies to toss up a few of their own that challenge the old jargon-rich shibboleths.

The two-day marketing summit that opened here today came up with four: 3S, 5Cs, 4Ps and 3Ps. Simple? Find out for yourself.

Tata Sons’ executive director R. Gopalakrishnan plumped for 3S — that spells sticky, sweaty stuff.

“All CEOs need to spend at least 20 days in a year doing the sweaty, sticky stuff — which is to get out of their air-conditioned cabins and insular worlds to go down to the grassroots level and interact with their customers in all kinds of situations,” he said. “They should learn to promote multi-functional customer contact on a systematic basis.”

Gopalakrishnan said the customer was king — and companies had to build their marketing modules around him. The fee-paying passenger on an airline, for instance, ought to receive preferential treatment over the managing director of the company and he cited the instance of Saroj Dutta, who was bumped off the aircraft by one of his ground hostesses and forced to lounge about the airport for three hours before Jet Airways could find him a seat on the next flight.

Tarun Das, director general of CII, said: “One needs to concentrate on the 5 C’s for future business marketing. That’s faster change, more competition on the domestic and international front, consumers and their changing demand and preferences, increasing complexity in the way we do business, and the challenges which will emerge in the presence of the above.”

Anyone who can get a fix on this will pull ahead of competition, he said. Companies have started whining about the pace of liberalisation because of the increased competition in the market. Das said if anything, it will get even harder for firms to compete in the decade ahead.

Bharat Patel, chairman of Procter & Gamble Hygiene and Healthcare, said success hinged on the 4Ps: great product, precise pricing, promotion, perfect in-store ability (which implies proper distribution of products).

“Our own experience told us that 30 per cent of price reduction, plus right advertising, helped one of our brands grow 200 per cent over what it did earlier,” Patel said.

Coca-Cola India president Alex von Behr talked about the 3Ps — preference, price to value and pervasive presence. “Consumer insight, local and regional insight and connecting through consumers while executing the insight is what makes the biggest difference,” he said.

Raj Jain, managing director of Whirlpool India, said a company ought not to strap itself into a strait-jacket by talking about only one narrowly focused aspect of its business. “So, we don’t sell washing machines. We sell washing solutions. There are other players in the business — the detergent guys, the power providers and the water utilities blokes who need to come together to make that solution available.”

In order to have a wider reach one must concentrate on better infrastructure and extensive advertising He stressed “ to drive innovation as a process and thinking, one should concentrate on creativity and advertising.”

The speakers were of the view that the role of technology is changing fast in the landscape of industry.

   

 
 
INDIAN OIL RULES OUT IBP MERGER 
 
 
A STAFF REPORTER
 
Calcutta, Aug. 21: 
Indian Oil Corporation (IOC) chairman M. S. Ramachandran has ruled out any merger possibility of newly acquired subsidiary IBP with itself, at least in the near future.

“The government still retains a 26 per cent stake in the company and can execute a put option for its remaining stake only after one year. Indian Oil, on the other hand, has the right to exercise a call option only after three years. So during this period, merger is not a possibility,” he said.

Both companies, however, are in the process of arriving at a common marketing strategy in order to arrive at the best possible association.

Ramachandran, who was here today to chair IBP’s 93rd annual general meeting, said the company will commission more retail outlets during the current financial year in order to strengthen its marketing network. He added that IBP is currently restructuring its chemicals and engineering businesses which have posted a poor performance in the last few years.

“The company has appointed Ernst & Young and KPMG to prepare a viability report for these two divisions. The report is expected to be submitted sometime in September,” he said, adding the company will take a decision on these two divisions after taking the report into cognisance.

The engineering division, which manufactures cryogenic containers for industrial and biological applications, recorded merely a Rs 11.72 crore turnover in 2001-02 against Rs 22.88 crore in the previous year.

However, the company expects that the division may turnaround in the current fiscal year in view of the current demand pattern, he said.

The chemical division, which manufactures industrial explosives and accessories, also reported a decline in sales last year on account of sluggish market conditions.

Sources said both the divisions might be hived off and sold as and when it gets the opportunity.

Petroleum however continues to be the main focus of the company’s business operation and contributes to the bulk of the turnover.

IBP managing director Arun Jyoti said the company plans to set up 300 retail outlets during the current financial year. The company, which currently has 1,559 retail outlets in the country, is planning to launch a new campaign under the slogan ‘Pure bhi, pura bhi’ in the face of campaigns on fuel quality and quantity by its rivals.

The company is optimistic of steady growth in the petroleum business group in the current year following its new marketing thrust.

Besides petroleum, IBP is also focussing on lubricants. The company recorded a sales volume of 33,396 kilolitres of lubricants last year against 33,593 kilolitres in 2000-01.

   

 
 
SUBSIDIARY TO BE SET UP IN LANKA 
 
 
A STAFF REPORTER
 
Calcutta, Aug. 21: 
Indian Oil Corporation (IOC), the country’s only Fortune-500 company, is going global.

The public sector oil major has set up a wholly-owned subsidiary in Sri Lanka for marketing petroleum products in the island country.

Stating this here today, IOC chairman M. S. Ramachandran said Sri Lanka offers several opportunities so far as the petroleum products are concerned. The subsidiary will be able to tap these opportunities.

IOC is also setting up a 50:50 joint venture with Sri Lankan firm CPC to build up a distribution network in that country.

“The joint venture will take care of our requirement of storage tanks to distribute products. This will also market aviation fuel in Sri Lanka,” he said.

The initial investment in both companies will be $ 50 million and IOC has already obtained the necessary approvals for the purpose.

Ramachandran said the subsidiary will set up 100 retail outlets in the current year for which it has received clearance from the Sri Lankan government.

IOC will export 0.48 million tonnes of petroleum products annually to Sri Lanka.

   

 
 
STATES, CENTRE SLUG IT OUT OVER TRANSFER OF FUNDS 
 
 
OUR SPECIAL CORRESPONDENT
 
New Delhi, Aug. 21: 
A battle royale has erupted between the states and the Centre over the transfer of Rs 98,000 crore worth of centrally sponsored schemes.

States led by Madhya Pradesh and Bengal have demanded that control over the lion’s share of these schemes be handed over to them.

At a meeting of the National Development Council’s sub-group on this issue held here today, chaired by Planning Commission deputy chairman K. C. Pant, the Centre decided to transfer just nine schemes accounting for 6.9 per cent of funds, despite previous promises to transfer far more funds.

“We have long been demanding that centrally sponsored schemes be transferred with funds to us,” Dasgupta said after the meeting attended by among others agriculture minister Ajit Singh, expenditure secretary C. S. Rao, MP chief minister Digvijay Singh, finance ministers from West Bengal and Andhra Pradesh and Gujarat’s development minister.

The only important scheme transferred by the Centre to states was the Rs 596-crore Annapoorna Yojana which gives cheap grain to the poorest of the poor families.

“Most of the major schemes like the Prime Minister’s Gram Sarak Yojana, Sampurna Gramin Yojana relate to state subjects, how can rural roads be central subjects and implemented by the Centre,” Bengal finance minister Asim Dasgupta asked, adding he and others present at the meeting had made this amply clear to the central leadership.

A protest note from the Bengal government entitled “Views of the government of West Bengal” in fact said “the exercise has not only been inconsistent with the principle of transfer laid down in the NDC approach paper, it has also been grossly unfair to the states.”

What Pant did not say but was possibly uppermost on his mind was the fact that many of the states are known for reckless spending and the financial bankruptcy in which they have sunk. Some states like Bihar have not paid employees for months. Under such circumstances, any major fund transfers on any head could well be misused by these states to try balance their red-inked books.

The states said they are also unhappy the Centre often disburses funds for these schemes through non-government organisations and banks while ignoring the constitutional need to channel these through the state governments.

Dasgupta, suggesting a way out, said a cornerstone of any new system has to be that the Centre will disburse the money only through the state governments. But he added that funds can be tied to certain conditions. Funds for a project could be given out for a certain time and then after a joint appraisal of how it has been spent, the last tranche for the year which is usually the heaviest, could be released.

Full Plan panel meet

The full Planning Commission is expected to meet in the first week of October under the chairmanship of Prime Minister Atal Bihari Vajpayee.

Pant told newspersons after a meeting of the committee on the transfer of centrally sponsored schemes here, that “An internal meeting of the Planning Commission will be held which will be followed by the full Planning Commission meeting in the first week of October.”

Pant added the date for the NDC which includes both the Plan body as well as all chief ministers of all states and Union Territories is, however, yet to be decided. The last NDC meeting was held on September 1, 2001, which approved the draft approach to the Tenth five year plan (2002-07) envisaging a GDP growth rate of 8 per cent.

   

 
 
ZENITH TO PROVIDE SOLUTIONS TO RURAL BANKS 
 
 
ALOKANANDA GHOSH
 
Goa, Aug. 21: 
Zenith Infotech, the software division of the Rs 200-crore Zenith Computers, will focus on providing banking solutions to co-operative and rural banks in the country.

Addressing a press conference, chief executive officer Akash Saraf said that the technology solutions developed by Zenith would allow banks in smaller towns and cities to provide services and facilities to compete with private players.

“Our main focus will be the individual or small and medium banks who have to compete with private players,” says Saraf. There are around 65,000 branches of co-operative banks and 92,000 agricultural banks in the country. “Around 10 to 15 per cent of the co-operative banks are expected to be networked within the next three to four years.”

“We see a great opportunity in the co-operative banking sector. Our solutions take on the role of the MIS manager. Moreover, Zenith offers complete implementation, including hardware, software, training and networking,” adds Saraf.

Banc724— the comprehensive centralised banking solution from Zenith—will provide smaller banks with a 70 per cent level of technology competence compared with private banks. The company has a team of 150 support engineers serving 1,400 installations of the software in 70 banks across the country.

“We are also working on providing mobile banking solutions through portable devices like palmtops,” adds Saraf. “This is to enable connectivity to banks that cannot be reached through the internet or wired networking applications.”

Saraf says that the company is also working on developing software solutions in languages other than those that follow the Devnagri script. Zenith will also focus on network management, and proving solutions for emerging wireless and data communication platforms.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.53	HK $1	Rs.  6.15*
UK £1	Rs. 74.17	SW Fr 1	Rs. 32.05*
Euro	Rs. 47.54	Sing $1	Rs. 27.40*
Yen 100	Rs. 41.03	Aus $1	Rs. 26.20*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta				Bombay

Gold Std (10gm)	Rs. 5220	Gold Std (10 gm)Rs. 5110
Gold 22 carat	Rs. 4930	Gold 22 carat	  NA
Silver bar (Kg)	Rs. 7625	Silver (Kg)	Rs. 7800
Silver portion	Rs. 7725	Silver portion	  NA

Stock Indices

Sensex		3084.38		-5.20
BSE-100		1558.08		-1.64
S&P CNX Nifty	 988.45		-0.10
Calcutta	 111.85		-0.38
Skindia GDR	 468.26		+3.01
   
 

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