Rs 8454 crore recast plan for SAIL
Telecom firms earn reprieve
Jaitley winner in power battle with Joshi
51% sale in Nat Fertilizer cleared
Crude pressure on petro prices
Infy seeks okay for buyouts abroad
Oil reserve plan goes awry
Infosys hammering triggers sensex slide
Foreign Exchange, Bullion, Stock Indices

New Delhi, Feb 15 
The Union cabinet today cleared a Rs 8,454 crore restructuring package for the loss-making Steel Authority of India Ltd (SAIL) and a voluntary retirement scheme to ease out one lakh of its 1.6 lakh workers over a period of three to five years.

The restructuring package includes loan writeoffs amounting to Rs 5,454 crore and government guarantees for market borrowings worth Rs 3,000 crore.

The cabinet also cleared SAIL�s plans to divest its stake and give up management control of its Durgapur-based Alloy Steel Plant (ASP), Salem steel plant and Visveswariya Iron and Steel in Karnataka.

It also approved a proposal to find a joint venture partner for Indian Iron and Steel Company (IISCO) which will hold a majority stake in the Burnpur-based steelmaker.

SAIL has also been allowed to divest its captive power plants at Bokaro, Durgapur and Rourkela, the second oxygen plant at Bhilai besides a fertiliser plant at Rourkela. The plants being sold off were described as �non-core� by steel secretary Ashok Basu who briefed reporters after the cabinet meeting.

A committee of secretaries headed by the cabinet secretary and including the finance and steel secretaries has been set up to oversee SAIL�s business restructuring plans which will involve breaking up the Rs 15,000 crore company into two separate companies � a long products steelmaker and a flat products company.

Although the ministry of disinvestment wanted the cabinet to give the go-ahead to concurrent moves to privatise SAIL, the cabinet felt this would not only be politically inexpedient but also send out panic signals in the market. Consequently, it was decided that the original recommendations of management consultants McKinsey and Company to break up SAIL and then start moves to privatise them would be a better option.

McKinsey wanted SAIL to be first re-organised into two strategic business units (SBUs) � one a flat products company comprising Bokaro and Rourkela Steel plants and the other a long products company comprising Bhilai and Durgapur Steel plants. The suggestion was to put the flat products company on the block first as intense competition could be expected in this segment. Later, the long products company could be sold off.

The cabinet decision had become a dire necessity for the navratna company as some 43 per cent of its net worth of Rs 8,400 crore had been eroded. Further delay in clearing the revival package may have placed SAIL, the world�s 10th largest steelmaker, in the sick bay.

�Once this restructuring is through, SAIL is bound to bounce back and emerge as a force to reckon with,� said SAIL chairman Arvind Pande.

The writeoff of loans from SDF implies that Tata Steel which too borrowed heavily from the Fund can expect a similar writeoff whenever it applies. The steel ministry is already working on how to handle such a contingency but steel secretary Basu refused to comment on this possibility stating it was a hypothetical situation.

SAIL will also be raising market loans worth Rs 3,000 crore in two tranches. A first tranche of Rs 1,500 crore will help meet the steel giant�s immediate loan repayment obligations. Another Rs 1,500 crore loan (on which the government will give a 50 per cent interest subsidy) will fund its ambitious VRS plan.

SAIL, which was a profitable PSU till 1997, reported a loss of Rs 1,574 crore in 1998-99. Its expected to notch up a total loss of Rs 5,000 crore by 2002-2003. Its debt-equity ratio is also expected to go up from 2.34 in 1998-99 to 7.68 by 2002-03.    

New Delhi, Feb 15 
Private basic and cellular operators today earned a reprieve when the government extended the last date for the payment of licence fees from January 31 to March 15 this year. At the same time, it slapped a penalty on those operators who have not paid their earlier dues.

�This is supportive action from the government,� said T.V. Ramachanadran, executive chairman of the Cellular Operators� Association of India (COAI) .�The government will not lose anything while the companies will be able to pay up their dues within the current financial year. Modicom and Fascel are the only two operators that have yet to pay their licence fee dues. They will be paying up soon.�� The government has also threatened the operators with legal action if they do not accept the new offer.

The private telecom operators had sought extension of the date for the payment of outstanding dues to migrate from the licence fee regime to revenue sharing system under the National Telecom Policy 1999.

The operators will be able to avail of this benefit only if the licensees agree to furnish bank guarantees securitising the full amount of outstanding dues and pay the interest to be calculated from March 15, 2000. The bank guarantees to be furnished by the operators should be valid till March 31, 2000.

The operators will also have to pay a cash penalty of two per cent per month along with the bank guarantee.

This two per cent penalty will be levied from December 31, 1999 for the failure of the private operators to securitise the bank guarantees.

If the operator clears its outstanding dues on or before February 29, it will not be required to furnish any bank guarantee.

Meanwhile, the cabinet committee on economic affairs (CCEA) today approved the proposal by Dishnet Private Limited to raise capital through the issue of American Depositary Rights/Global Depositary Rights equivalent to 45.12 per cent of the company�s equity capital.    

New Delhi, Feb. 15 
Minister for disinvestment Arun Jaitley has trumped his colleague, heavy industry minister Manohar Joshi, in a long-simmering row over who calls the shots in the sale of government�s stake in state-owned firms. Jaitley will now decide on the rehabilitation of 23 sick companies, all of which had been under Joshi�s charge till recently. Earlier, the government drew up elaborate plans to forge joint ventures or alliances to revive these ailing PSUs under the guidance of the department of heavy industry.

Joshi has now been denied this privilege, not long after he was stripped of the authority to determine divestment strategies for state-owned companies. The minister has already registered his protest.

The 23 PSUs Jaitley will now preside over include Praga Tools, Scooters India, Bridge & Roof Company, HMT (all business groups), Andrew Yule (all 11 units), Hindustan Paper Corporation (individual units), Hindustan Cables, Bharat Pumps & Compressors, Hindustan Paper Corporation, Nepa Ltd, Engineering Projects (I), Cement Corporation of India and Hindustan Photo Films.

Sources in the department of heavy industry say Joshi, who sees his stripped-down role as a denial of the spoils of office, has turned into a lame-duck minister.

He is now left with sundry jobs like answering Parliament questions, providing inputs to the department of disinvestment as and when necessary and taking corrective steps on reports submitted by government auditors.    

New Delhi, Feb. 15 
The Cabinet Committee on Disinvestment today approved the divestment of up to 51 per cent of the government�s stake in National Fertilizer Ltd (NFL) to a strategic buyer along with the transfer of management control. The committee decided that a merchant banker/global advisor would be appointed to suggested the modalities for the NFL divestment.

An official spokesperson said an inter-ministerial group to be constituted by the department of disinvestment would select the merchant banker. The group will comprise representatives from the administrative ministry, department of public enterprises, department of economic affairs and chief executive and director (finance) of the company. The disinvestment process in the public sector is proposed to be completed by December 31 this year.

NFL, which was incorporated in 1974, has an authorised share capital of Rs 500 crore with a paid-up capital of Rs 490.58 crore. The government has a 97.6 per cent stake in the company while the financial institutions have 2.3 per cent and employees hold 0.1 per cent.

IA retirement age cut

Earlier in the day, the Cabinet Committee on Economic Affairs (CCEA) cleared a proposal by Indian Airlines to revert the retirement age of its employees from 60 to 58 years. This will help the national carrier save Rs 193.38 crore over the next five years. Three deputy managing directors and three directors will retire this year as a result of the decision.

The CCEA has also decided to wind up Mandya National Paper Mills Ltd, a subsidiary of Hindustan Paper Corporation.

The government will give a non-plan loan of Rs 20 crore towards a voluntary retirement scheme for all its 135 employees.

Mahajan said CCEA has decided to set up a five-member empowered committee to take a decision on the proposed $230 million investment by ONGC Videsh Ltd in Petro Vietnam�s offshore oil field.    

Mumbai, Feb 15 
The firming up of international crude oil prices to a nine-year high of $ 29 per barrel has fuelled fears about another round of price hikes in key petroleum products.

Though the state-owned oil companies � Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) � are yet to take a decision on the issue, industry sources say a fresh hike is expected in decontrolled products such as naphtha, furnace oil and low sulphur heavy stock (LSHS).

Petrochemical majors like Reliance Industries, IPCL and Bombay Dyeing are expected to follow suit, raising prices of their products to meet the higher cost of petroleum inputs. Sources say firm crude quotes have already pushed up international prices of feedstocks such as naphtha. At present, naphtha is priced in the range of $ 270-280 per tonne as against $ 250 till recently. Similarly, the prices of paraxylene � a crucial input used in the manufacture of fibre intermediates � has jumped to around $ 430 per tonne.

Analysts are of the view that the firm trend in crude prices may percolate to other downstream products such as ethylene, polypropylene (PP) polyethylene (PE), poly vinyl chloride (PVC), mono-ethylene glycol (MEG) and purified terephthalic acid (PTA).

An IOC spokesperson, however, said the company had not taken any decision on raising the prices of products such as naphtha. A senior official with Reliance Industries also said he knew of no plans to hike product prices. Domestic prices of naphtha have moved in sync with the surge in crude oil prices. From a level of Rs 8533 per tonne in November 1998, it surged to Rs 14,600 per tonne in December 1999.

A senior analyst with a foreign brokerage said international crude prices will remain firm till March-end, when the Opec meets to review the production ceilings that have been in force for the past six months.

Though pressure has been mounting on the Opec for relaxing the supply squeeze, the association has not indicated it is ready to oblige. �Since crude oil prices are expected to remain firm, at least for another month or so, the prices of petro products should rise,� the analyst added.    

Mumbai, Feb 15 
Infotech major Infosys Technologies Ltd today confirmed that it has sought a blanket approval for facilitating overseas acquisitions from the Reserve Bank of India (RBI). The move indicates that the value limit of $ 100 million imposed by the finance ministry while opening up the automatic approval route for Indian software companies seeking acquisitions abroad, failed to whet its appetite for overseas acquisitions.

Moreover, with the valuations that infotech companies attract nowadays in international markets, the value limit of $ 100 million would not amount to much, say analysts. In fact, it would create a hurdle when an opportune time for striking a deal arrives.

The announcement is significant as it comes at a time when rumours swirling in the marketplace point to Infosys tying the knot with Cambridge Technologies of the US. The company remained tight-lipped on the issue, but confirmed today that it has made an application before the Special Composite Committee of the RBI in response to the guidelines issued by the ministry of finance, for overseas business acquisition by Indian software companies through ADR/GDR realisations/ stock swap, dated December 27, 1999.    

New Delhi, Feb 15 
With the unabated rise in crude prices, refineries, both in the private and public sectors, have lowered their capacity utilisation putting a pressure on the oil reserve in the country.

The petroleum managers have suddenly woken up to the fact that the country is no longer oil-surplus and Indian Oil has been forced to make emergency purchases to ensure that there is no shortage in the domestic market. In the process, the government had to abandon its plan to keep a 30-day strategic reserve of petroleum products.

The problem is with the commissioning of Reliance Petroleum�s 27 million tonne per annum refinery at Jamnagar, petroleum managers were under the impression that the country was heading for a glut in petroleum products. They practically stopped import of products except for LPG and kerosene.

The decision was based on the projections submitted by domestic refineries. However, refineries went back on their commitments, making it difficult for the petroleum managers to maintain the planned strategic reserve.

Unlike industrialised countries, India never had an oil security plan. This is mainly because almost the entire oil industry was in the public sector. However, the government has now under consideration an oil security plan which would call for a minimum mandatory strategic reserve.

Official sources are reluctant to quantify the shortfall in crude throughput in the last two months. There is an officially approved supply plan. The shortfall is estimated to be around one million tonnes in each of the last two months.    

Mumbai, Feb 15 
A plunge in the share price of Infosys Technologies sent the Bombay Stock Exchange (BSE) tumbling 121.12 points to close at 5803.19 after it plumbed an intra-day low of 5797.31. With today�s fall, the 30-scrip index has lost much of the startling gains it had piled up in the course of a week.

Other shares went like Infosys, suffering heavy erosion in values as operators scrambled to square up their positions. The imposition of a 5 per cent additional margin on 10 scrips by the Securities and Exchange Board of India (Sebi) weakened the sentiment and weighed heavily on trading.

Infosys, which lost Rs 779.95 to close at Rs 9980, was whipped by investors who reacted to the $ 127 fall in the company�s American Depository Receipts (ADRs) to $ 543 late on Monday compared with its previous finish of $ 670.

Select index-based shares like ACC, Bhel, Grasim, L&T, Hindalco, MTNL, Reliance and SBI suffered the most as local institutions offloaded them to book profits. Foreign institutional investors (FIIs) maintained a low profile in the market.

Dealers also attribute the selling pressure to the fact that today was the last day of trading on the National Stock Exchange (NSE).

Cigarette maker ITC was the star performer, sizzling on sustained buying by local funds. Its rise arrested, to a large extent, further falls in the sensex. The scrip closed Rs 74.35 higher at Rs 1004.25.

BSES was also in great demand and was locked in the eight per cent upper-end circuit filter for the fourth straight day as a result of good buying by long-term investors. Among specified shares, Gujarat Gas and Dabur hit the lower circuit bands.

Satyam Computer clocked the highest turnover of Rs 719.75 crore of the total market volume of Rs 5210.40 crore. HFCL and Zee were among the other actively traded shares. Satyam rose by Rs 56 to Rs 3971, HFCL shot up by Rs 77 to Rs 1362 and BSES rose by Rs 23 to Rs 311.05.

Zee Telefilms, after breaching the Rs 1400 mark, declined by Rs 31 to Rs 1367. Operators are waiting to see how the market behaves tomorrow, the first day of the new settlement on the NSE. The day will also see TV-18 making a debut on bourses.    

Foreign Exchange
US $1	Rs 43.61	HK $1	Rs. 5.55*
UK �1	Rs 69.21	SW Fr 1	Rs. 26.20
Euro	Rs 42.79	Sing $1	Rs. 25.40
Yen 100	Rs 39.96	Aus $1	Rs. 27.00*
*SBI TC buying rates; others are forex market closing rates


Calcutta		Bombay
Gold Std (10gm)	Rs 4855	Gold Std (10 gm)	Rs 4785
Gold 22 carat	Rs 4585	Gold 22 carat	Rs 4425
Silver bar (Kg)	Rs 8100	Silver (Kg)	Rs 8190
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Stock Indices

Sensex	5803.19	-121.12
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