New hats thrown into DTO ring
New surety bait to attract power multinationals
VSNL bonus issue caught in a jam
MTNL chief wants selloff hastened
Institutions ready to quit Indal
Foreign Exchange, Bullion, Stock Indices

New Delhi, June 27 
The telecom row is still simmering, and the all-important department has been reduced to a ring for wannabe secretaries wrestling for the loaves of office.

After Indian Telecom Service (ITS) officials threatened to strike work and piled pressure on the government to wrest top jobs from the IAS, smaller groups have thrown their hats in the ring. Today, it was the turn of the officers of the Central Secretariat Services (CSS) to announce that they would vie with others for the post of secretary, department of telecom operations (DTO).

The wild-card entry has turned what was expected to be a two-horse race between R.N. Goel, (member, production) and N. R. Mokhariwale, (member operations) in the Telecom Commission, into a fierce contest with new candidates popping up from different alleys of a byzantine bureaucracy.

Over the next few days, ITS officials working for the Centre for Development of Telematics (C-Dot) and Telecommunications Consultants India (TCIL) are likely to enter the contest. �The names of C-DoT and TCIL officers are being finalised. There are many senior officers in these two organisations and other telecom public sector units,� sources in C-DoT said. CSS officers who could step in to the arena are those who have been working in the department of telecommunications (DoT) on deputation. At present, there are about a few hundred officials and other staff from CSS services in the department.

�We have spent more than 8 to 10 years in the department. We have the knowledge and experience to make it to the top posts. If IAS and ITS officers can become a secretary, so can we,� a senior CSS official working in the DoT said.

Ashok Kumar Sinha, president of the Indian Telecom Services Association (ITSA), expressed surprise that CSS/GCS officers were planning to stake their claim to the DTO secretary�s post. �Let the government decide, we do not wish to comment,� he said

However, sources in the communications ministry said only ITS officers are eligible for the post, and that the government would not consider requests made by CSS and General Central Services (GCS).

�Officials of GCS are inducted to fill vacancies in different departments of the government. There are about 10 officials from GCS in DoT and they have already exceeded their mandatory five-year deputation period. It is interesting how they can make such a claim,� a senior official in DoT said.

�Though the final decision rests with the Cabinet secretariat, too many candidates and organisations in the race could create problems,� he added.

Meanwhile, the work allocation between the existing DTS and the newly formed DTO will be finalised after consulting Prime Minister Atal Behari Vajpayee and the Cabinet Secretariat.    

Lisbon, June 27 
The Vajpayee government today announced it was planning a new guarantee structure for foreign companies that wish to enter India�s power transmission sector.

The government explained that this would allow early �financial closure of the deals being signed�.

It was not really a form of counter-guarantee that has been given to a clutch of fast-track power generation projects set up by foreign companies.

Addressing the India-European Union business summit, Prime Minister Atal Behari Vajpayee said : �We are also willing to consider a new guarantee structure for large transmission and power purchase systems as well as accelerating the competitive bidding process for the renovation and modernisation of our power generation companies. These initiatives, I am sure, will prove attractive to many European companies.�

Explaining this offer, sources said several companies were trying to enter the power transmission sector. �We have to think of a way of ensuring that the deals are closed early. For that, the guarantee structure has to be reviewed and a new one put in place. It is not going to be entirely the same as the counter-guarantee given to

a few power generation projects back in the mid-nineties.�

The Prime Minister told the summit, given India�s power requirement, enormous investments are needed over the next five years to make the country self-sufficient in power. Important reform initiatives have been taken to improve the viability of private investment in this sector. Today, all foreign direct investment in the power sector is approved on the automatic route and there is no upper limit on investment.��

He said the federal government has set up a Central Power Regulatory Authority thus depoliticising the sensitive issue of power tariff. As many as 14 state governments have followed this initiative.

This coupled with specific, result-oriented measures aimed at improving the financial health of the state electricity boards, unbundling of generation, transmission and distribution and making meters compulsory for all users, have now made private investment in the power sector more attractive.    

Mumbai, June 27 
The Videsh Sanchar Nigam (VSNL) board could not discuss the proposal for a bonus today after a traffic snarl in the suburbs prevented several outstation directors from reaching the company�s headquarters in the heart of the city.

Marketmen awaiting the announcement of a bonus were taken aback when the telecom major intimated authorities at BSE that the issue could not be taken up at today�s meeting �because a few directors were caught in a traffic jam�.

Traffic authorities in the city say the gridlock occurred when a resident from Bandra, an upscale city suburb, set up road blocks after a car knocked down a boy crossing the road.

Company director (operations) Amitabh Kumar said three directors were caught in the traffic jam that resulted from the blockade for more than four hours.

The meeting, scheduled for 10 am, could start only four hours later. �Since the first item on the board�s agenda was the approval of the audited annual results, there was hardly any time to discuss the bonus proposal,� Kumar said.

Operators on stock exchanges, who had built up large positions on expectations of a generous bonus announcement by VSNL, were unhappy. �We have been caught on the wrong foot. Nobody could imagine this. They were critical that the board decided to adjourn the meeting without considering the important proposal, and also the slipshod manner in which the company managed the board meeting.

According to Kumar, VSNL will have to inform stock exchanges once again by giving them the mandatory notices.

�The procedure will have to be completed again, though the new dates have not been finalised,� he added.    

New Delhi, June 27 
Mahanagar Telephone Nigam Ltd (MTNL) chief S. Rajagopalan has cautioned the government that delaying the divestment process in the state-owned telecom major may not be a good idea.

Emphasising that the best time to divest was now, Rajagopalan pointed out that early divestment would help the company get a better price as compared with one after other competitors had a chance to stabilise their position. He warned that MTNL may well face an erosion in its value in such a scenario.

�Let it not face the same fate as Maruti and other public sector units are facing now. It would be better if the government could divest its stake through a strategic sale,� he said. The company�s valuation would have received a boost if it had introduced the mobile phone service, he added.

�Three years is a long time and with the telecom industry growing at a fast pace, the sooner MTNL is divested the better for it,� said Rajagopalan.

The Cabinet committee on disinvestment (CCD) had announced divestment of the government�s holding in 14 public sector units including large companies like Indian Oil Corp (IOC), IBP, Concor and State Trading Corp (STC).

However, it deferred a decision on companies like Maruti Udyog Ltd, VSNL and MTNL over which there were differences within the Cabinet. It had also sought early completion of the disinvestment process in Indian Airlines, Air-India, Balco and IPCL.

Telecom credit pact with Amex

Meanwhile, MTNL and American Express travel related services have entered into an alliance for India�s first co-branded telecom credit card � MTNL American Express credit card. �The alliance with American Express will enable MTNL to offer consumers a convenient way of paying their phone bills and avail of the benefits of using an American Express credit card,� Rajagopalan said today.    

Calcutta, June 27 
The financial institutions have offered to sell their stake in Indian Aluminium Company (Indal) to Hindalco in response to an open offer made by the A V Birla group firm.

According to a senior Hindalco official, the response to the open offer was overwhelming with more than 32 per cent of Indal�s shares being lodged for sale.

Life Insurance Corporation, General Insurance Corporation and others have placed their entire block of shares � which amount to a little over 12 per cent of Indal�s equity � with Hindalco. �LIC alone held 6.6 million shares, or 9 per cent, all of which it has offered to sell off,� the official said.

The official refused to interpret the move as a sign that financial institutions lacked faith in Hindalco or in the aluminium sector. �The fall in the share price of a company after it is bought out by another is a general trend. It is possible that FIs thought it fit to sell their shares in Indal because our acquisition price was attractive,� the official said.

The shares will be purchased on a proportionate basis because the company cannot buy more than 20 per cent under Sebi�s open-offer norms.

Hindalco, which acquired Canadian aluminium giant Alcan�s 54.6 per cent stake in Indal, will finally control 74.6 per cent in the Calcutta-based aluminium company.

The official indicated that Indal might eventually be merged with Hindalco in the long run in a move which will be seen as a logical corollary to the takeover. At present though, Indal will retain its status as an independent company with its headquarters in Calcutta, the official said.

�We now have to pay sales tax when we buy Indal�s products and vice versa. In a competitive scenario, it is not prudent to have expenses which serve no productive purpose,� the official said.

Earlier, Hindalco president A. K. Agarwala said Indal�s acquisition would help his company emerge as one of the top 10 aluminium companies in the world. A co-ordinating team, comprising top officials from both companies, has been set up to hasten the process of integration, he said.

Kumar Mangalam Birla, who became the chairman of the newly constituted Indal Board, said: �With the combined strength of Hindalco and Indal, our aim is to catapult our aluminium business to the top league, first in south-east Asia and later join the ranks of the top 10 global players.�

�The targets can be achieved by co-ordinating various functions and tasks, homogenising systems and procedures, integrating logistics, cost optimisation and product rationalisation,� Indal CEO S. K. Tamotia said.

The Indal board was reconstituted today. Half of its earlier members have been retained but the A V Birla group has nominated three directors � Tamotia, B.L. Shah and Santrupt Misra.

Alcan on way out

Alcan Aluminium may sever its last link with India if talks with the A V Birla group to divest its stake in Utkal Alumina International � a joint venture between Hydro Aluminium, Indal and the Canadian aluminium major � lead to a deal.    

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