Stormy debate turns beeps into bops
Wage payout at 3 banks tied to financial goals
Exide board approves Chloride deal
Castrol share zooms on parent stake-hike buzz
Travel House mulls buyouts
Reliance nominees join BSES board
ICICI to recall bonds
Measures to help states cover the gaps
Foreign Exchange, Bullion, Stock Indices

New Delhi, Nov 24: 
An open house convened by the Telecom Regulatory Authority of India (Trai) to debate whether fixed line phone companies should be allowed to sell mobile connections degenerated into a scrum that yielded little more than blows and pushed key issues into limbo.

Top cellular operators, including T. V. Ramachandran of the Cellular Operators� Association (COAI) and Virat Bhatia of Birla AT&T, walked out of the session in a huff.

So hostile was the situation that COAI vice-chairman asked Trai chief M. S. Verma for a one-to-one meeting since it was not possible to put across points of view in today�s melee.

Agitated consumer representatives accused Trai of not being concerned about consumers and favouring cell operators at their expense. Even as Verma tried to intervene, open fist-fights broke out between them and the cellular firms.

Trai continued to hold discussions with only 20 of the 150-200 people after many participants left the venue. �We will hold the meeting even if it continues late into the night. All those who have come will be given a chance to speak,� Verma said. The watchdog is now planning a special meeting with telecom experts, comprising largely of former DoT officials.

Even the honchos were not restrained. Sharp exchanges between Asim Ghosh, chief executive officer of Hutchison Telecom, and Mahendra Nahata of Himachal Futuristic Communications Limited, left the entire house watching in disbelief.

Cellular operators and fixed service providers accused each other of stage-managing the responses of consumer forums. Forums like Telecom Watchdog and Telecom User Group of India criticised the regulator and cellular operators for denying customers low-cost mobile telephone services.

Cellular firms claimed that they were not opposed to low-cost mobile services promised by fixed-line operators, but insisted that there should be a level playing field. There was no agreement on what �low-cost service� actually meant.

Cellular firms say fixed line telephone operators should not allowed to offer mobile services within their areas unless they pay a share of their revenues to the government.

Basic operators say they can offer mobile calls at the rate of Rs 1.20 for three minutes if they are permitted to use the wireless-in-local-loop technology compared with Rs 4 to Rs 8 under the Global System for Mobile communications (GSM) system used by mobile phone firms. However, they are opposed to sharing their revenues with the government.

�WiLL services is part of licence to basic. It is a technology option and not a new service. In fact cellular service providers are offering internet services, which by the same parameters is a new service,� S.C Khanna, chairman, Association of Basic Telecom Operators, said.

At the end of the day, only two of the 133 issue on the agenda could be discussed.

Convergence Bill

The draft Convergence Bill for the creation of a super-regulator for voice and data communication through any medium (telecom or broadcasting) is expected to win approval from the Group of Ministers.

Under the Bill, the regulator could be strengthened by broadening its areas of operations to play the role of super-regulator. It is likely to be discussed by the Cabinet soon. According to Pramod Mahajan, ministry of information and technology, the Bill is likely to be introduced in the current session of Parliament.

Inaugurating a seminar on people issues in telecom and IT organised by Bharti Enterprises and National HRD network he said: �The Bill for converging communication, information technology and broadcasting media has almost been finalised, and hopefully, we will try to introduce it in the current session of Parliament.�    

Calcutta, Nov 24: 
The finance ministry has linked salary hikes and payment of wage arrears at the three weak banks � Uco, United Bank of India and Allahabad Bank � to the achievement of financial targets spelt out in their restructuring plans.

The big guns will also feel the heat. The chairman and managing directors, executive directors, general managers and deputy general managers will be responsible for guiding banks to these goals, and will have to face the consequences of failure.

Reserve Bank special officer M. Damodaran, who has been asked to look into the recast plan, held discussions with the chairmen and managing directors of the three city-based banks today. Earlier, he was the secretary of the banking division in the finance ministry. �The payment of wage arrears, fresh enhancements in the remuneration packages and bonus will hinge on whether the targets have been met,� the finance ministry said.

The new set of conditions will affect 87,000 employees, who had been hoping for the payment of arrears arising from a July 1 wage deal reached after months of struggle and days of haggling between the unions and employees. The new pay is supposed to be implemented with retrospective effect, from November 1, 1997. Employees of all other nationalised banks have already received their arrears.

The finance ministry says the annual targets under restructuring plans should be split into quarterly tasks, and the progress in achieving them will be monitored by the Reserve Bank. United Bank of India has already failed to meet any of the goals set in the monitorable action plan (MAP) � a document it had submitted to the central bank two years back.

The finance ministry has asked banks to enter into a memoranda of understanding with the government to implement recast plans and achieve targets set out in them. It also wants unions to commit themselves to these objectives.

Sources in Uco and UBI said Damodaran held detailed discussions on all matters, and asked the bank managements to initiate talks with the unions. He is expected to meet Indian Bank�s chairman and managing director next week.

Sources said Damodaran said the issue of recapitalisation assistance to banks and subvention of interest on the expenses to be incurred on VRS and technology upgradation plan is being handled separately by the department of expenditure.    

Calcutta, Nov 24: 
Automotive battery major Exide Industries Ltd has finalised the acquisition of Chloride Batteries South East Asia Pte Ltd, owned by the Singapore-based Chloride Eastern.

The board of Exide at a meeting here today also cleared the acquisition of a 49 per cent stake in Associated Battery Manufacturers (Ceylon) Ltd of Sri Lanka, yet another subsidiary of Chloride Eastern. Exide will pay Singapore $ 3.8 million (Rs 10.14 crore) and Sri Lankan Rs 112.21 million (Rs 6.48 crore) for the stake in the two plants.This will take the total expenditure on the acquisitions to Rs 16.62 crore.

The move will consolidate the Rajen Raheja group�s automotive and industrial battery business in terms of ownership, management, technology and marketing and will enable Exide become a global player. The arrangement will also help Exide gain access to a number of battery brands such Chloride, Jupiter and Lucas, particularly the latter�s automotive and motor-cycle battery brands marketed by Associated Battery.

In February this year, Exide India formed a strategic partnership with Shin-Kobe Electric Machinery Company of Japan, the $ 530 million storage battery manufacturer.    

Mumbai, Nov 24: 
Is the British oil giant BP Amoco plc raising its stake in domestic lubricant major Castrol India through a buyback or an open offer? Rumours about the possibility of such a move swirled across bourses, pushing up the company scrip by almost 10 per cent and turning into a surprise winner.

BP Amoco had recently taken over Burmah Castrol Plc for � 3 billion. Prior to the acquisition, Burmah held a stake of over 51 per cent in the domestic venture. Market circles are now of the belief that the British parent would take advantage of the prevailing low prices of Castrol scrip and come out with buyback or an open offer to increase its shareholding in the company.

Sources close to the company, however, denied the possibility even though many in the market feel it could happen.

Recently, Philips India and MICO Ltd were some of the foreign companies where parents chose the open offer and buyback routes to bolster their holdings.

According to market watchers, it was the buzz about the parent hiking its stake that drove up the Castrol scrip to a high of Rs 226.30 after opening at Rs 209. It rose to an intra-day high of Rs 231. The counter witnessed total of 2,197 deals with over 1.77 lakh shares changing hands. They accounted for a turnover of Rs 3.98 crore.

Not very long ago, the Castrol India had been hammered in the markets due to concerns over the growing competition in the lubricants business, which has been dominated by public sector units and marked by diminishing margins.

Castrol India is one of the major players in the lubes industry with a market share of around 20 per cent. The company has seven plants in various locations of which its Silvassa unit is one among the largest plants within the group in the world.

During October last year, Castrol had realigned its business whereby it merged its commercial and consumer businesses by keeping its marine and industrial businesses as separate business divisions.    

New Delhi, Nov 24: 
The ranks of companies on the prowl for acquisitions are swelling by the day, with International Travel House (ITH), an ITC group company, now adding to the numbers.

Anil Bhandari, managing director ITH, said the company is presently discussing a buyout or merger with a few select travel companies.

However, Bhandari added it would be too premature at this stage to name the firms and the details of money involved in the deals being negotiated.

After shedding realtor Landbase India Ltd, ITC Travel House has decided to focus only on the area of its core competence � travel related services.

ITH is also set to expand its business in the car rental segment. It is the sole licensee of Europecar, the international brand in car rentals, through its wholly-owned subsidiary Vins Overseas India Ltd. Currently available in nine cities across India, the Europecar India network is to expand to Jaipur and Hyderabad by the end of this fiscal, said Bhandari. Later, it may be extended to Ahmedabad and Baroda. Apart from the four metros, the network currently includes Bangalore and Pune.

Bhandari envisages a growth of 30 per cent for ITH at the end of the fiscal.

The company is focusing on developing the outbound leisure segment and on software on the Oracle platform for the car rental business. This is being done by its in-house infotech division, with assistance from ITC Infotech, said Bhandari.

ITH, which recorded a turnover of Rs 175 crore in the last fiscal, posted a growth of 103 per cent in income to Rs 14.70 crore from Rs 7.30 crore in the first half of the current fiscal year.

�The high upswing is ascribable primarily due to the sale of the company�s shareholding in Landbase India Ltd in September to ITC,� said Bhandari. He added that even excluding the income from Landbase India Ltd, the company has posted a 23 per cent growth in profit after taxes in the first half of this fiscal, at Rs 74 lakh as compared to 60 lakh in the first half of last year.

While ITH derives 75 per cent of its revenues from corporate travel, about 15 per cent comes from leisure travellers.

ITH�s conference management division is tied up with international conferences being held in India up to the year 2006. These includes the Agro Seed conference this year, lab-tech conference next year and the World Mining Conference in 2003.    

Mumbai, Nov 24: 
The BSES board today formalised the appointment of two nominees from the Reliance group as directors of the company.

S C Gupta and Satish Seth, the two nominees of the Reliance group, attended the board meeting held today. With the induction of the two members from the Reliance group, the total strength of the BSES board has now gone up to10, which also includes three nominees from FIs.

Gupta and Seth are old hands at Reliance. Gupta is a director on the board of Reliance Power Ventures, an RIL subsidiary. Seth, a chartered accountant, is a senior official at RIL. The board meeting held today was attended by the two new members of the board. BSES chairman-cum-managing director R V Shahi could not be reached for his comments on the new appointments. The Reliance group had made a bid through Reliance Industries and Reliance Power Ventures to acquire 20 per cent of BSES� equity. The open offer met with some success.    

Mumbai, Nov 24: 
Leading term lending institution, ICICI Ltd today decided to recall bonds worth Rs 605 crore issued by the erstwhile SCICI Ltd in July-August 1996.

At the same time, the institution also offered eligible bondholders an option to switchover their existing holdings into fixed deposits with �special� interest rates.

Speaking to The Telegraph, an ICICI official said that the fixed deposits were offering interest rates ranging between 11 to 11.5 per cent for various maturities against the amount redeemed.

SCICI, which was subsequently merged into ICICI has made a public issue of unsecured redeemable bonds in the nature of promissory notes aggregating Rs 500 crore in July-August 1996. The bonds were issued in the nature of deep discount bonds, regular return bonds, pension bonds and money back bonds.    

New Delhi, Nov 24: 
The Reserve Bank of India (RBI) is looking at a slew of measures to assist state governments to raise additional funds from the markets in order to slash their ballooning fiscal deficits.

The budget estimate of the gross fiscal deficit of the states for 2000-01 has been put at Rs 85, 971 crore comprising Rs 41,441 crore in the form of loans from the central government, Rs 9,909 crore as market borrowings and Rs 34,621 crore in the form of loans from financial institutions, provident funds, reserve funds, deposits and advances.

Currently, states take recourse to a ways and means arrangement (WMA) and an overdraft scheme to raise funds.

Speaking at the Indian States� Reform Forum here today, RBI deputy governor Y.V. Reddy said the bank may suggest �institutional arrangements� in the form of a state funding corporation which could help states that have been reluctant to approach the markets directly.

The central bank is in the process of preparing a technical paper and the suggestion will be incorporated in it, he said.

States have been reluctant to tap the markets to raise funds and so far only seven states have tapped the debt markets to raise additional funds to bridge a portion of their deficits.

Reddy said seven states have raised funds from the market since 1998-99, when they were allowed to mop up between 5-35 per cent of their gross borrowing.

The budget estimate of the gross fiscal deficit of the states for 2000-01 has been put at Rs 85, 971 crore comprising Rs 41,441 crore in the form of loans from the central government, Rs 9,909 crore as market borrowings and Rs 34,621 crore in the form of loans from financial institutions, provident funds, reserve funds, deposits and advances.

Reddy said the WMA and overdraft scheme were being reviewed by a group of state finance secretaries which would finalise its report by the end of December.

The review will address only temporary mismatches between receipts and expenditures in state budgets but not structural issues.

The third initiative by the central bank would be to consider assistance for states whose cash and budgetary positions have some links with consortium arrangements for food credit, he added.

State governments have been under severe financial pressure and will have to tap the external markets after the Union government made it clear that financial assistance towards medium-term fiscal reform packages for indebted states would be linked to conditionalities.

It was decided at a meeting between finance minister Yashwant Sinha and planning commission deputy chairman K.C.Pant that the central government�s financial condition would not allow it to cough up its commitment to plan schemes in the next two years.

States have been seeking more funds to restructure finance and pay their employees higher salaries at par with central scales after the implementation of the recommendations of the fifth pay commission.    


Foreign Exchange

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