Reality check puts Mamata gravy train on slow trac
Pressler to steer Morepen in US
Indian Oil holds key to Haldia debt recast
Fizz returns to cola wars
TV makers seek duty sops

New Delhi, Feb. 25: 
It’s a wrench for Mamata Banerjee. Strapped for cash and short of options, the railway minister has no other way to shore up by railway’s feeble finances than raising passenger fares.

She will find it hard to ignore the suggestions made by Economic Survey and the Parliamentary committee on railways to rework passenger and freight tariffs. President K. R. Narayanan expressed his concern over the railways’ inability to improve safety standards — expected to cost Rs 15,000 crore — in his pre-budget speech to both houses of Parliament.

The economic survey released on Friday has suggested that the railways can regain its market share in freight traffic by augmenting capacity, correct pricing and an organisational revamp. The advice comes at a time when its share has declined from 88 per cent in 1950 to 35 per cent in 1999-2000. A Rail Tariff Authority, along the lines of Telecom Regulatory Authority of India (Trai), has also been proposed.

An internal committee of the railway ministry has suggested a minimum 5 per cent increase in passenger fares to mop up resources. Mamata has, however, asked the Railway Board to examine alternatives to making tickets costlier. She appears to have told the Prime Minister Atal Bihari Vajpayee and finance minister Yashwant Sinha that the proposed increase will yield only Rs 400-500 crore and asked them to provide additional resources from the exchequer.

Mamata will also have to reckon with the Rs 30,000 crore worth of projects which have not taken off. These outlays were set aside even though she allocated only Rs 623 crore to the all-important task of gauge conversion in her last budget against Rs 735 core in 1999-2000 and Rs 803 crore in 1998-99.

The railways does not generate internal resources any more, thanks to its bloated workforce and salary bills inflated by implementing the Fifth Pay Commission recommendations. Even in 1990, it had Rs 3,000-4,000 crore in the account. It is raising funds from the market at high interest rates. “In the past eight years, passenger tariffs have been increased 10 per cent annually, while the costs have jumped 15 per cent. Subsidies have surged a staggering 185 per cent from Rs 1,462 crore in 1990 Rs 4,165 crore in 1999-2000,” sources said.

“The government can subsidise tariffs, but it should pay for it. Railways should phase out cross-subsidisation in three years. Any support required for passenger traffic should be the responsibility of the government,” IDFC chief Naseer Munjee said .

The railways had earned Rs 70 crore by way of advertisement on coaches till January. It plans to generate about Rs 150 crore through development of real estate and another Rs 450 crore by way of leasing out fibre optic cables. However, the estimate for revenues in this financial year has been scaled down by Rs 50 crore to Rs 450 crore.

More important, the railways’ plan outlay had also come down to 5.3 per cent in the Ninth Plan from 7.6 per cent in the Seventh Plan. The operating ratio — the percentage ratio of working expenses to gross revenue — has reached an unsustainable level of 98.80 per cent during 2000-01.

With no sources of cash available, Mamata will have to run the gauntlet and make travel costlier months before her political fortunes are decided in Bengal’s assembly election.


Mumbai, Feb. 25: 
Morepen Laboratories, manufacturers of generic bulk drugs firm, has hired Larry Pressler, the powerful three-term United States senator to head its US operations.

Known to be an India baiter with his infamous Pressler Amendment, the appointment of the Republican hawk is considered as a coup of sorts for the fledgling drug firm.

Pressler will be advising the board of Morepen, the world’s largest manufacturer of Loratidine, an anti-histamine drug.

Confirming this, the spokesperson for Morepen said: “Pressler will be in-charge of the marketing functions and business opportunities of our US operations. He is an expert on the Indian economy,” the spokesperson said.

For the Indian drug firm, Morepen Laboratories which prides itself as a transnational firm with a turnover of Rs 223 crore, Pressler’s expertise would help the company get a foothold in the.multi-billion dollar US pharmaceutical market.

The company has launched Mandelay, a drug to treat pre-mature ejaculation. It is manufactured in USA by Morepen’s US counterpart and marketed in India by Morepen, under co-marketing rights. It is the youngest Indian company to get US FDA approval.

Morepen exports to over 50 countries, including the highly competitive markets of USA, Western Europe and Canada. Recently, the company, entered into a joint venture with DiaMed AG, a leading firm in blood group serology.

As part of the venture, the company has launched a rapid malaria detection test kit.

Larry Pressler brings with him the qualities of a lawyer, an academician, political commentator and an entrepreneur.


Calcutta, Feb. 25: 
The Industrial Development Bank of India (IDBI) will finalise the debt restructuring programme of the Rs 5,170-crore Haldia Petrochemicals (HPL) after Indian Oil Corporation takes a decision on its participation in the project, IDBI chairman S. K. Chakrabarti said here today.

“Last week, HPL’s creditors had met to discuss its debt restructuring plan. Several options are being weighed, which include waiving a portion of the principal amount or the interest. However, no decision on HPL has been taken yet,” he said.

KPMG is carrying out a due diligence of HPL on behalf of IOC. The oil major’s board will take a decision on investing in HPL at its March 4 meeting .

IDBI’s exposure to HPL is more than Rs 1,000 crore and the interest charged is 17.5 per cent.

“The debt restructuring for HPL depends on whether IOC participates in the project. If IOC does not come, it will be a painful restructuring,” the IDBI chairman said.

The consortium of financial institutions, including IDBI, IFCI and ICICI, has agreed to grant an 18-month moratorium on loan repayment.

The payment was supposed to start from April 2001, but now HPL will start repaying the loan from September 2002.

Haldia Petrochemicals’ debt burden is to the tune of Rs 4,200 crore. To get rid of the high debt burden, the HPL management has taken the decision to transfer the naphtha cracker unit to a new company where IOC will be offered a 49 per cent stake and HPL will have a 51 per cent stake. A portion of the debt will also be transferred to that new company, to give a breather to HPL.

HPL has already has achieved a 91 per cent capacity utilisation and recorded an operating profit of Rs 14 crore till December 2000.

Talking about IDBI’s plan to enter the insurance business, Chakrabarti said they have appointed M. P. Chitale & Co to carry out a study on the FI’s entry into insurance.

“They will scout for a joint venture partner for our insurance foray. We have yet to decide whether to enter the life or non-life insurance segments or both,” the IDBI chairman said.

The FI also plans to increase its exposure to venture capital funding. “We will even extend finances to the tune of Rs 20 crore in a single project,” the IDBI chairman said.


New Delhi, Feb. 25: 
The winter chill over, the cola war is all set to hot up for the summer. Pepsi has slapped a legal notice on Coke for using its ad line “Dil manage more,” in its latest Thums Up commercial, in a manner which Pepsi claims denigrates its brand and confuses the customer.

Pepsi states Coke has violated the copyrights act in its latest TV commercial, aired on Friday by using the adline “Dil manage more, aha!” in a scene where Salman Khan mimmicks the Pepsi adline. Thums Up’s latest advertising strategy clearly positions it as a drink for young adults and the teen brigade, insinuating that the ‘other’ brand (read Pepsi) is too sweet and meant for kids.

“We are sending a legal notice to Coke stating they can’t use our ad line as it violates the Copyrights Act,” said Vibha Rishi, Pepsi’s executive director (marketing).

“Pepsi’s patent and trademark attorney has also sent a notice to Sony Entertainment Television, which has aired the ad,” said Pepsi’s spokesperson.

Pepsi’s legal notice to Hindustan Coca Cola states that the catch phrase “Yeh dil manage more” was coined by Pepsi in 1998 and has been used in its advertisements. It adds that Pepsi’s exclusive rights over its trademarks and logos extends to such catch lines and the phrase is exclusively identified with Pepsi.

In the controversial ad, Salman Khan asks a teenage boy to choose between two colas from a glass. He grimaces on tasting the sweeter drink, dismissing it as fit only for kids, at which stage Salman mimmicks the “Dil manage more” line that Shah Rukh originally did for Pepsi.

In an earlier ad of the same series, it showed a boy at a trendy hangout place, asking for a drink whose name is blanked out. He is then admonished by Salman for asking for a children’s drink in a joint for grown-ups.

Pepsi officials state that STAR TV has already conveyed to them that they have refused the telecast of Thums Up’s latest ad as the advertising code of Hongkong Standards and Practice (STAR is telecasts from HongKong) has found the ad to be against its regulations.

Meanwhile Pepsi is slated to air two new television commercials on Tuesday to coincide with the Pepsi Cup test series. One of the ads features Indian captain Saurav Ganguly.


New Delhi, Feb. 25: 
Even as rival channels slug it out in the war of ratings to determine which one has the maximum viewers glued to their television sets, television makers themselves are facing the heat. With demand heading south and the invasion of cheap Chinese television sets, electronics goods makers, especially television manufacturers, are in dire straits.

Consumer Electronics and Television Manufacturers Association (Cetma) wants the present 30 per cent rebate on maximum retail price (MRP) for CTVs to be increased to 40 per cent.

“For refrigerators, washing machines, air conditioners, audio systems, calculators, electronic clocks, the rate is 40 per cent,” argues Suresh Khanna, secretary general, Cetma. “The 30 per cent rebate for CTVs took into account an 8 per cent average sales tax, but since that is now above 12 per cent, upward revision of the rate has become a necessity,” he says.

The association pointed out that that of the 69 items presently under the MRP-based excise duty, seven form part of Cetma’s product portfolio.

Khanna said it makes no sense to give a 10 per cent lower rebate to colour TVs. he argued that prices of Indian TVs must come down if they are to compete with cheaper imports and the grey market.

The association argued that the government will stand to lose about Rs 62 crore if the abatement is increased. Cetma says if the rebate is fixd at 40 per cent, the industry, which sells about 5 million CTV sets presently, would witness a 10 per cent additional growth which will generate surplus revenue. Khanna says CTVs will become cheaper by Rs 250 per set if the rebate is increased to 40 per cent.

What remains to be seen is whether a Rs 250 reduction in CTV prices is sufficient enough to boost sales.

However, it is not CTVs alone that Cetma is worried about. “Organized B&W television production has fallen by more than 50 per cent due to a negative growth in this segment and the growth of the grey market,” says Khanna.


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