Reliance makes open offer to pick up 20% in BSES
Assocham-Ficci feud breaks out in the open
JNPT heads for corporatisation
Heavy FII selling pulls sensex down 123 points
Baijal against ATR planes for Indian Airlines
Net auction rules to be blended into Tea Order
Naidu takes selloff fight to central camp
Foreign Exchange, Bullion, Stock Indices

Mumbai, May 19 
Reliance Industries Ltd today finally announced its intention to gain control of BSES Ltd when it made an an open offer to acquire a 20 per cent equity stake in the power utility.

BSES is the country�s largest power distribution company.

The open offer, valued approximately at a whopping Rs 650 crore at a price of Rs 234 per share, will be financed by Reliance from its own resources.

Reliance is the single largest private sector shareholder in BSES with aggregate shareholding of 14.82 per cent of subscribed and fully paid up equity share capital. Though the move is not unexpected, the timing of the offer has surprised industry observers.

According to a late-night statement issued by the Ambani flagship, Reliance, along with its wholly-owned subsidiary, Reliance Power Ventures Private Ltd (RPVL), has informed the Securities and Exchange Board of India (Sebi), the stock exchanges and the target company of its intention to make an open offer for further acquisition of equity shares of BSES Ltd.

Reliance managing director Anil Ambani, said, �The open offer for BSES represents a strategic step in our pursuit of attractive growth opportunities in the power sector. The offer reflects our commitment to development of the power sector, a core infrastructural area, in line with national priorities.�

�We believe this step is in the best interests of both companies and will significantly contribute to enhancement of overall shareholder value for shareholders of Reliance and BSES�, he added.

Industry observers say the move by Reliance will bring about a synergy in their operations. Reliance, which is only into power generation, has various projects in the pipeline with total capacity of over 6000 MW.

Analysts, however, were of the opinion that the offer may not attract retail investors since the BSES share closed at Rs 255 as against RIL�s open offer at Rs 234 per share. The company explained the offer price of Rs 234 per share, as representing the minimum 26 week average price specified by Sebi. The offer is likely to remain open for a period of 30 days.    

New Delhi, May 19 
In an incident that exposes the deep-seated mistrust between chambers racing against each other for larger space and attention, Assocham today walked out of joint business councils after accusing Ficci of acting in bad faith and elbowing its nominees out of reckoning in the forums created to boost foreign trade.

�The functioning of the JBCs did not follow the spirit of partnership. We had written to Ficci but there was no response,� Assocham president Shekhar Bajaj said. Rejecting the idea of tying up with Ficci in future, Bajaj said Ficci was supposed to provide secretarial services under the arrangement, but there was no partnership at all in the decision-making process.

However, Assocham secretary Jayant Bhuyian said there was still scope for talks with Ficci in future. �We had been consistently neglected and any future patchup will be on the basis of equal partnership. We are at no loss, we have business associations with more than 12 apex chambers world wide. We will focus on strengthening them,� he said.

Rebutting the charges, Ficci secretary general Amit Mitra said Assocham�s pullout had taken him by surprise because the chairman and co-chairman� who were nominated by Assocham � had lauded the work done by Ficci secretariat�s work as recently as a month ago.

Bhuyian claimed that Assocham had to go public about its severing of ties and quitting the councils because Ficci had not responded to its communication.

�The same issue had created problems four years ago when Assocham executive board members felt that our nominees were being sidelined and the joint business councils were being dominated by Ficci nominees. We had taken up the issue with them. Ficci had assured us that JBCs would be operated in a more balanced and equitable manner. However, no progress has been made in the direction of working together,� Bhuyian said.

Mitra, on the other hand, said he could not respond to Assocham�s move till the issue is discussed by Ficci�s executive board. �I cannot respond. We will do so after the executive board takes up the issue. In any case, the Ficci president and other officials are currently not here,� he said.    

Mumbai, May 19 
Jawaharlal Nehru Port (JNPT), the youngest in the country, is set to become the first corporatised port and a regional hub.

The department of shipping is examining a proposal to corporatise the Jawaharlal Nehru Port Trust (JNPT).

�Corporatisation is the way to improve the management of JNPT. It would give us an opportunity to compete with ports worldwide. We have sent a proposal to the government to register the port under the Companies Act. We have completed the draft articles of association. Once the proposal is cleared, we can start the process of corporatisation in five months,� JNPT deputy chairman Kishor G. Apte said.

JNPT has already started evaluating the assets and equity structure for the new company on the basis of a report submitted by the US-based Cornel Group. The consultant had recommended that the port liquidate its debts worth Rs 1,600 crore.

Once it is corporatised, the JNPT board plans to provide incentives to attract more traffic. It also plans to strengthen its links with the hinterland with the help of better road and railway networks.

�The consultants have also suggested that JNPT with its target of handling 25 million tonnes of cargo should have a capital base of Rs 300 crore,� said Apte.

�JNPT has been financed by loans taken from the World Bank, and the Mumbai and Kandla ports. We would be able to offload the government�s equity, once the loans are repaid or converted into equity,� Apte said.

JNPT has already repaid Rs 335 crore worth of loans, which includes Rs 300 crore as interest. In the last financial year, JNPT had retired loans worth Rs 197 crore, including an interest component of Rs 70 crore.

JNPT will launch a programme to become India�s hub port. �We will make JNPT a hub port, which means all the traffic to and from various countries would arrive first at JNPT, and then be routed to other ports,� Apte said.

Further, there are plans to modernise and expand the port capacity to deal with large ships. The resources will be generated internally, and by leasing out the JNPT land to private companies.    

Mumbai, May 19 
The Bombay Stock Exchange (BSE) sensitive index today plunged 123 points to 4068.65 due to aggressive selling by foreign institutional investors (FIIs) and squaring off by domestic operators.

The selloff, which pounded shares on both sides of the digital divide, was triggered by concerns over the future course of interest rates in the US.

Also, today being the last day of the settlement on BSE, operators rushed to cover their open positions.

Even finance minister Yashwant Sinha�s statements allaying fears over the impact of reduction in India�s weightage in the MSCI index failed to cheer the market.

�Overall, the market sentiment was weak since trading started. At noon, institutions and operators unloaded their positions because there was no incentive in keeping large open positions,� a broker said.

Even stocks like Zee Telefilms, which jumped after its inclusion in the MSCI index, could not hold on to its gains and closed below its intra-day high.

Marketmen warned that the bearish sentiment is set to continue in the immediate term, and that means repeated bouts of volatility cannot be ruled out.

The sensex opened at 4149.39, shot to an intra-day high of 4150.77, before heavy selling drove it down to the low of 4026.64. However, it finished marginally higher at 4068.65 points, showing a drop of 123.79 points over its previous close. Tisco extended its gains to the second day, mainly because of the good performance in 1999-2000.

From the specified section, HFCL, BPCL and HPCL hit their 12 per cent upper circuit filters. Prominent shares which suffered on account of the changes in the MSCI were Wipro and Reliance Petroleum � both of which closed at their lower-end price bands. While RPL was deleted from the index, Wipro�s weightage of market capitalisation was reduced to 30 per cent from earlier 100 per cent.

The total volume of business was substantially lower at Rs 1902.53 as against Thursday�s turnover of Rs 2608.08 crore.    

New Delhi, May 19 
As a parting gift to his masters in the BJP government, outgoing Indian Airlines managing director Anil Baijal today announced that he has sent an official note which points out that though the Cabinet has allowed aviation turbine fuel at a concessional rate to ATR aircraft, it would be still uneconomic for IA to fly these planes.

The BJP government has been pushing the domestic carrier to buy the 52-seater French-made turbo prop aircraft for a long time.

Earlier this year, in an apparent move to push Indian Airlines into doing just this, the Cabinet took a decision to price aviation turbine fuel for turbo prop aircraft at 40 per cent lower than the normal rate.

The Cabinet decision, ostensibly to help out airlines flying on uneconomic routes to the northeast and Jammu and Kashmir, had simply stated that ATF would be sold to all turbo prop aircraft at global rates instead of the inflated rate at which it sold to domestic airlines. While the global price of ATF is Rs 9,000 per kilolitre, domestic consumers are charged Rs 15,000 per kl.

But the real reason for the decision, many had felt, was a techno- economic viability note prepared by IA last year, which had said it would be uneconomic to buy and fly ATRs as they were cost-inefficient due to a number of factors including high aviation fuel prices.

Baijal is the second IA chief to oppose ATR purchase and the second one to be forced out of the airline�s cockpit. While he was politely told his tenure as CEO could not be extended and he would have to leave by this month�s end, the airline�s previous managing director P.C.Sen had been sacked by former civil aviation minister Ananth Kumar.    

Calcutta, May 19 
With the major tea auctioneers in the country deciding to introduce auctions on the internet, the Union commerce and industry ministry will soon amend the Tea Marketing Control Order (TMCO) to facilitate cyber auctions.

The ministry is also seriously considering a move to withdraw the Rs 2 per kg central excise duty on bulk tea.

Omar Abdullah, minister of state for commerce and industry, who was in the city to address the 117th annual general meeting of Indian Tea Association said that the TMCO is not e-commerce friendly and hence the government plans to modify it.

�The TMCO was introduced to put a check on severe under-invoicing, but now it has to be modified to meet the changed circumstances. I will shortly interact with my officials to take a decision on the matter,� he said.

Under the TMCO, 75 per cent of the total tea production should come to the auctions. But this quantity goes down if a company exports or sells its teas in packets. At present about 55 per cent of the total tea production makes its way to the auction.

The minister expressed concern about the declining tea exports. �We have lost the Egyptian market to Kenyan tea. We are trying to enter into a bilateral trade agreement with Egypt. I have asked the Indian tea industry to export green tea to Morocco. The government is also exploring possibilities to enter into a free trade agreement with Chile and Columbia,� Abdullah said.

He said that the duty differentials introduced by the Russian government for bulk and packaged teas have created a problem of access to the Russian market which is by far the biggest market for Indian tea.

Owing to the higher duties levied on packaged tea in Russia, some Russian packers freely blend inferior teas with Indian ones and market them as Indian teas.

�We have taken up the matter strongly in the meetings of the Indo-Russian inter-governmental convention and the Russian side has agreed to take remedial action. We will again take up the matter with the Russian government.�    

New Delhi, May 19 
Worried by the possible political fallout of Andhra Pradesh chief minister Chandrababu Naidu�s opposition to the BJP government�s decision to privatise the Vizag steel plant, three top central ministers � finance minister Yashwant Sinha, disinvestment minister Arun Jaitley and steel minister Dilip Roy � today went into a hour-and-a-half long huddle with Naidu, trying to persuade him to see the reform light.

But all the PM�s men failed to move him, as it was not a cyber-savvy Naidu, but one with an eye on the electorate, who chose the occasion to turn anti-liberalisation today. Naidu not only stuck to his guns opposing Vizag�s selloff deal, but also made clear his displeasure over the impending privatisation of the 18 PSUs in the state, identified for divestment this year. And to rub salt into the BJP�s wounds, he asked the trio to explain the Centre�s rationale for selecting the specific units for sale.

�Chandrababu Naidu asked them to give us details on which PSUs are in the red, the extent of their losses and what is being done about them. They want to do something about Vizag, hence, we want to compare what is being done elsewhere,� said Yerram Naidu, the TDP�s parliamentary party leader and the Andhra CM�s right hand man who also attended the meeting at North Block.

The plan calls for selling off a 51 per cent stake in the Rs 8,000 crore Vizag steel plant. The shore-based steel plant has been running up huge losses which are estimated at Rs 4.600 crore and has already been given two bail out packages.

The TDP is already in a sulk over the Centre�s decision against the rollback of hikes in food and fertiliser prices, a decision which is costing it dearly politically in Andhra Pradesh.

There are indications that Naidu might just have his way this time around. Judging from the fact that the Centre had to consult a state chief minister for his concurrence on the disinvestment of a few PSUs, Naidu may get a chance to avenge the subsidy defeat.

However, the government is caught in an unenviable situation, because if it slips up and bows to Naidu�s demands, it is sure to spell doom for the disinvestment programme. Taking the cue from Naidu�s �victory,� its other ally Mamata Banerjee may well stop every divestment planned in West Bengal. With the West Bengal assembly elections due next year, wooing the electorate is also a top priority for Banerjee.

Jaitley, who has the onerous responsibility of presiding over the Vizag selloff, told reporters after the meeting, �We told them that strategic disinvestment was the best route to save the loss-making Vizag, though efforts are being made to help the unit out of its troubles.�

Obviously that is the stand the Centre wishes to stick to. But with Naidu seeking a status report on the entire PSU divestment situation, Jaitley may find the logic not only for the Vizag sale, but also the sale of another 17 PSUs, being blown apart by the Andhra battering ram.

Prime Minister Atal Behari Vajpayee�s trouble shooter on economic issues, N. K. Singh was also present at the meeting.    

Foreign Exchange
US $1	Rs 43.97	HK $1	Rs 5.55*
UK �1	Rs 65.26	SW Fr 1	Rs 24.90*
Euro	Rs 39.05	Sing $1	Rs 25.05*
Yen 100	Rs 40.74	Aus $1	Rs 24.75*
*SBI TC buying rates; others are forex market closing rates


Calcutta		Bombay
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Stock Indices

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