Coke drops plan to acquire bottler
Reliance Petro move upsets Indian Oil
BPL launches dotcom arm
Infosys net profit spurts 117%
Satyam Computer net at Rs 135 cr
Rs 343-cr Monsanto recast plan cleared
SIA eyes strategic stake in Air-India
Foreign Exchange, Bullion, Stock Indices

New Delhi, April 11 
Coca-Cola India has dropped its plans to buy out its franchisee bottler in West Bengal—the Goenka-owned Black Diamond Beverages Coca-Cola. This indicates a freeze, at least temporarily, on further acquisition of franchisee bottlers in India.

The West Bengal bottler has been in final stages of negotiations with the cola giant and the deal was to have been sealed this year. However, Coca Cola, which has been forced to write off $400 million of its assets in India in the first quarter of 2000, has decided to put these plans in cold storage.

The decision to stall further acquisitions in India appears to have been taken long before Coke’s chief financial officer Gary Fayward announced in New York that the company was writing off half of its assets in India.

In keeping with its worldwide strategy of converting key bottling franchisees into company owned bottling plants, Coke has invested more than Rs 1,000 crore in acquiring bottlers so that an integrated bottling entity would give them better returns. Among the major bottlers which have been bought over are those in Agra, Hyderabad, Delhi, Bangalore, Mumbai. Only four major bottlers — the Goenkas in West Bengal, Ladhanis in Uttar Pradesh, another Goenka group in Ludhiana, and the Khandharis in Punjab are now left as independent bottling entities.

N.R. Goenka, part owner of Black Diamond Beverages, refused to comment on why Coke was not willing to buy out their plant. “Coke has shelved its plan of buying us out. That is mainly because we have to set our house in order first. My brother and I are going in for a legal split of the jointly owned property,” he added.

However, sources close to Goenka said both brothers were reasonably ready to go ahead with the deal and the hitch was from the Coke’s side.

Coca Cola India declined to comment on the issue. Black Diamond Beverages runs two bottling plants located at Taratola and Dankuni, from which the bottler distributes Coca-Cola beverages all over West Bengal.

According to earlier plans, the Taratola plant was to have gone to N.R. Goenka while the unit at Dankuni was to go to his brother S.R. Goenka. The Taratola plant has a bottling capacity of 600 bottles per minute. The Dankuni plant has two lines - one with a capacity of 600 bottles per minute and the other has a capacity of 20 pet bottles per minute. N R Goenka had earlier said, “The soft drink market requires huge long term investments in terms of equipment, marketing facilities which is not possible for us anymore. Hence, it only makes sense for us to sell them off. Only a company of Coke’s size can afford the long period of wait before returns on investment start materialising.”

The West Bengal soft drink market accounts for only about 15 million cases a year. But analysts say it is one of the fastest growing markets reporting up to 30 per cent growth a year. This they feel is the main reason why Coca-Cola has been eyeing the two plants for a long time.

Coca-Cola’s Thums Up is the top cola drink in the state, while Pepsi is reportedly the number two cola. Coke, which was re-launched in the mid-1990s, in Calcutta is third.    

New Delhi, April 11 
Indian Oil Corporation (IOC) is in a fix over Reliance Petroleum’s move to start direct marketing of petroleum products.

IOC has a marketing agreement with RPL that commits IOC to market 50 per cent of the controlled products on a take-or-pay basis. The remaining 50 per cent was to be marketed by a joint venture between the two.

However, soon after signing the deal with IOC, Reliance Petroleum applied for marketing rights. This was initially opposed by the officials in the ministry of petroleum and natural gas who pleaded that the marketing rights should be given to private players only after the administrative pricing mechanism (APM) was dismantled as scheduled on April 1, 2002.

If RPL gets the marketing rights, the proposed joint venture with IOC is doomed. This is provocation enough for IOC to scrap the entire agreement. However, IOC is unlikely to go in for such a drastic step considering the political clout the Reliance group enjoys.

The ministry had prepared a 10-page note listing reasons why RPL should not be given marketing rights before the deadline of April 1, 2002. Their objections may not hold good in the changed scenario. The Prime Minister’s Office (PMO) and the minister for petroleum and natural gas, Ram Naik, now see merit in what RPL says.

The official committee headed by additional secretary Naresh Narad is expected to submit a report recommending marketing rights to players like RPL and Mangalore Refinery and Petrochemicals Ltd (MRPL).

The APM is still in tact. Any one who enters marketing has to fit into the scheme like all the PSUs. As the pool account will continue to operate, Reliance has to be a part of the system. Under the APM, the dealers for PSU marketing companies are selected by a board constituted specifically for this. The question is whether RPL will agree to the government board selecting its dealers.

If RPL is exempted can the PSUs be denied the same facility. After all, the government is committed to ensuring a level playing field for all.

The retail outlets also will have to fall in line with the regulatory controls such as kerosene control order, MS/HSD control order and LPG control order.

In the petroleum sector, the maximum margin is in marketing.

Even the APM regime ensures a 12 per cent return. Players like RPL and MRPL can get the best of both free market and regulatory regime if they succeed in getting certain provisions waived. This should not be difficult.    

Bangalore, April 11 
BPL Telecom today launched, its internet venture, which will offer internet services in 31 cities across the country. Chairman and chief executive officer of the group Rajeev Chandrasekhar told reporters at the launch that the service will be accessible from 85 countries around the world from May this year.

The group had made an initial investment of Rs 188 crore in the internet company which will focus on providing quality service, giving the customers “a superior internet experience.”

Chandrasekhar said he had no acquisition plans at the moment, adding, “We will keep our options open if there is a good buy at an appropriate time.”

He said the company planned to lay 6000 km of optic fibre cables to offer high bandwidths and “our objective is to focus on building a scaleable IP network that will have access to group optic fibre networks and international gateways in the near future.”    

April 11 
Infosys Technologies today sent investors into raptures of joy by announcing better-than-expected numbers for 1999-2000 in a sterling performance capped by a 116.98 per cent surge in net profit at Rs 293.52 crore compared with Rs 135.27 crore in the previous year. Total income zoomed 80 per cent at Rs 921.46 crore from Rs 512.74 crore.

The board of directors met here today to recommend a final dividend of Rs 3 per share (60 per cent on par value of Rs 5 per share) for 1999-2000. Total dividend recommended for the year is Rs 4.50 per share (90 per cent on a Rs 5 share).

The dividend for 1999 and 1998 were Rs 3.75 per share (restated as 75 per cent on par value of Rs 5 per share) and Rs 3 per share (restated as 60 per cent on par value of Rs 5 per share) respectively.

The company’s excellent showing set the tone for a 99-point spurt in the BSE sensitive index, which closed at 5541.54.

The Infosys scrip gained Rs 787.05 to close at Rs 10,625.90 in a session that saw operators ignoring Monday’s 258-point plunge on the Nasdaq. Satyam Computer and Zee Telefilms — the two new heavyweights that now influence the course of the 30-scrip index in a big way — also finished with good gains.

Earlier, taking stock of the performance for the last financial year, Infosys said its three software development centres at Mohali, Hyderabad and Mysore had started operations.

The company’s first global development centre was inaugurated in Toronto in the last quarter ended March 31. Two more software development blocks, which can accommodate 1,200 employees, were completed at the Infosys Park in Bangalore.

“Both our topline and bottomline are stronger. We have also managed to control costs. More important, this is the 28th consecutive quarter of improved results,” Infosys chairman and CEO Narayana Murthy said in a live webcast from Bangalore.

Income for the fourth quarter increased 86 per cent at Rs 286 crore from Rs 153.70 crore in the corresponding quarter of 1998-99. Net profit soared 89.29 per cent at Rs 80.56 crore from Rs 42.56 crore in the quarter ended March 1999.    

April 11 
Satyam Computer Services today unwrapped a sparkling performance for 1999-2000, the highlight of which was a 68.70 per cent spurt in net profit at Rs 134.86 crore compared with Rs 79.94 crore in the previous year. The gains were fuelled by an astounding 119.21 per cent increase in fourth-quarter profit at Rs 42.09 crore from Rs 19.20 crore in the same quarter of the previous year.

Cumulative revenues for 1999-2000 rose to Rs 679.01 crore as against Rs 413.83 crore, representing an increase of 64 per cent. Fourth quarter income was pegged at Rs 206.79 crore compared with Rs 17.14 crore in the year-ago period. The board of directors have recommended a final dividend of 15 per cent. This takes the total payout to 30 per cent after adding the 15 per cent interim dividend declared earlier.

In a significant but overdue decision, the board also cleared a proposal to raise the ceiling on FII investment to 40 per cent from 30 per cent at present.

In addition, overseas corporate bodies and NRIs have been allowed to make investments equal to 10 per cent of the company’s Rs 56.23-crore equity capital.

Analysts said the numbers were in line with market expectations but pointed out that Satyam’s margins had shrunk in the fourth quarter. Stock markets applauded the results, pushing the scrip to its upper-end circuit filter before it closed at Rs 4216.90. In all, 9.39 lakh shares were reported to have changed hands.

Commenting on its performance, the Hyderabad-based information technology major said there were significant changes in the way it made money during the year.

For instance, earnings from Y2K businesses constituted only 5.2 per cent of the revenue.    

New Delhi, April 11 
The government today approved a Rs 343-crore business restructuring plan of Monsanto Chemicals India, iunder which the parent Monsanto Company will raise its stake in the Indian venture from 40 per cent to 72 per cent.

The clearance to the US multinational was part of the approval to 56 foreign direct investment (FDI) proposals worth Rs 508.45 crore given by industry minister Murasoli Maran.

The Monsanto proposal involves the acquisition of businesses from sister companies Monsanto Enterprises and Monsanto India and a complete buyout of Monsanto Technologies from Bretco Holdings Mauritius, a subsidiary of Monsanto USA.

Other proposals cleared by the minister, on the basis of recommendations by the Foreign Investment Promotion Board (FIPB), include those of HCL Perot Systems Mauritius, Computer Associates International and Agfa Gevaert NV Belgium.

Monsanto will fund its acquisitions through preferential allotment of Monsanto Chemicals shares to all the three companies at a price of Rs 1480 per share. After the preferential issue, the shareholding of Monsanto Company in Monsanto Chemcials will go up to 72.17 per cent from the present 39.97 per cent.

The government cleared the proposal of Mauritius-based HCL Perot to acquire shares worth Rs 19 crore in its software venture in the country.

DSQ World.Com Ltd was allowed to bring in 40 per cent foreign stake in its ISP and portal venture. HSBC Securities India Holdings Pvt Ltd and JP Morgan Securities India Pvt Ltd and Citibank Overseas Investment Corporation were also allowed to amend their earlier approval for NBFC activities. Another NBFC, Capital Group International Inc was allowed to set up shop in India by investing Rs 21.5 crore.

Foreign exchange broking firm Harlow Butler was allowed to increase its stake in the Indian venture from 51 to 75 per cent.

The other software companies which received FIPB approval include Kernex Microsystems (India) Private Ltd (Rs 2 crore) for software development, In Net IT and Telecom India Private Limited (Rs 9.90 crore), Keshma Technologies Ltd (Rs 5.16 crore) and Swami Cyber Solutions (Rs 5.60 crore) for software development.    

Singapore, April 11 
Singapore International Airlines (SIA) is keen to invest in India and is eyeing a strategic stake in Air-India. It is also scouting for a partner in Mumbai to set up a flight catering joint venture.

SIA’s chief executive Cheong Choon Kong told a group of visiting Indian journalists, “We are still awaiting more information” on India’s plans to divest stake in its national carrier.

Although Choong denied any talks on picking up a stake in Air-India, government officials in New Delhi say they have been sounded out by Singapore diplomats on whether there would be any objections to SIA pitching in with a bid for the carrier if and when it is thrown open to investors.

The ministry of disinvestment has already circulated a Cabinet note calling for the sale of 51 per cent shareholding in Air-India to a strategic partner.

At civil aviation minister Sharad Yadav’s insistence, the note also wants to throw open the bidding to foreign companies, including airline corporations. But this has yet to be cleared by the Cabinet.

Other SIA officials added that the airline would be able to firm up its interests once “the terms for Air-India privatisation were out in the open.”

But SIA is obviously keen on expanding by acquiring international airlines.

It has already taken a 49 per cent stake in Richard Branson’s Virgin Atlantic Airways for $ 963 million and is planning to bid as part of the Star Alliance to take a strategic stake in Thai Airways, its main competitor in south-east Asia. A recent bid to take over Ansett, the Australian airline, was scuttled at the last moment a few weeks back.

The airline, which currently earns about 10 per cent of its $7.79 million annual revenues, is actually looking at earnings of about 30 per cent of its profits and revenues from business outside Singapore.

Choong has already gone on record recently stating SIA’s “long term objective is to become a global group of airlines and airline related business.”

SIA officials said that any bid for Air-India would be made separately and not as part of any consortium.

While A-I has just 26 ageing aircraft and is in the red, SIA has a young fleet of 92 planes and earned a profit of over $ 1 billion. But A-I, as India’s flagship carrier, owns a goldmine of unused flying rights across the globe to most major markets and any buyer into the airline could easily cash in on this.

Singaporeans have not been very lucky with aviation sector investment bids in India till date. An attempt to launch a domestic airline in collaboration with the Tata group was scuttled by the changes in government policy by two successive civil aviation ministers who set themselves against the deal despite support from the Prime Minister’s office.

A bid to set up an international airport near Bangalore, again in collaboration with the Tatas, also came to nought because of deep divisions within the government.    

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