Freedom flights for local airlines
FIs threaten to counter Modi offer
Infotech spending bucks downturn
Lenders blow the Dabhol II fuse
Bajoria fails to keep date with Sebi
Trai pressure on BSNL to sew up interconnect deal
Sebi ruling on VST today
Magor focus on domestic tea market
Two pharma majors gulp rejig pills
Foreign Exchange, Bullion, Stock Indices

New Delhi, June 7: 
The new civil aviation policy, which is currently being finalised for the Cabinet, will create a system for sharing international traffic rights equitably among all domestic airlines who fulfil certain criteria.

Officials said the idea was to permit all domestic airlines that meet the criteria to opt for international air operations after a fixed waiting period.

The waiting period will be used by the two current national carriers � Indian Airlines and Air India � to improve their utilisation of accumulated bilaterals through own operations or code sharing deals.

A part of the new bilateral rights that India will acquire in the future as well as the old bilateral rights that Air India and Indian Airlines do not wish to operate will be up for the grabs and farmed out to players depending on experience and fleet size.

Even after they start international operations, these airlines will have to remain effectively Indian owned and run, ministry officials said. However, they will be allowed as well as encouraged to join international airline alliances for code sharing and exchange of frequent flyer programmes.

Since private airports are also being permitted, the government will see to it that there is no discrimination between different airports in allotting capacity to foreign and Indian run international airlines.

This means the government will not tend to �guide� certain airlines to fly to certain airports only. The rights may be given on a country-wide basis and airlines will be free to choose the airport they wish to fly to.

This decision has come about because of contrary pressures from airlines and regional political leaders who wish to attract certain airlines and want the Centre to play a role in this and airlines who wish or do not wish to fly to certain airports.

The government is also going to allow international charter flights the freedom of landing at any airport where there are customs facilities. Currently, they are allowed to land at selected destinations only. This is expected to give a fillip to charter tourist flights to various destinations directly.

After entering Indian airspace and being cleared out of one customs airport, charter flights will also have the freedom of flying to any other airport within the country.

At the same time, tourist charters from domestic airports to foreign destinations will also be permitted. However, steps will be taken to safeguard operations by scheduled international carriers.

This means that while these charters will be allowed, they will not be permitted to operate parallel services to scheduled operators. They could only operate in certain seasons such as summer months or for specific events like Olympic Games when tourist flow would warrant such charter flights.

The policy would however place no restrictions on global cargo flights.

This is expected to give a fillip to the government�s plans to develop certain airports in India as global cargo hubs. However, officials said, these global cargo flights would not be allowed to take on domestic cargo for offloading at Indian destinations on their flights.


Mumbai, June 7: 
In a rare move of acting tough, the financial institutions today took an unanimous decision not to participate in the open offer made by the promoters of Modi Rubber and even threatened to come out with a counter-offer.

The FIs�Unit Trust of India (UTI), Industrial Finance Corporation of India (IFCI), Life Insurance Corporation (LIC), General Insurance Corporation (GIC) and Industrial Development Bank of India (IDBI)�jointly hold a 44 per cent stake in the company.

The promoters of Modi Rubber have come out with an open offer to pick up 35 per cent of the company at a price of Rs 81.50 per share. The offer is currently open and will close on July 3.

The institutions today levelled allegations against the promoters, hinting that there were serious lapses in management and corporate governance practices followed by the Modis.

The decision was taken at a meeting of the heads of institutions today to consider the Modi offer.

The promoters had come out with a revised offer to purchase up to 87,64,186 equity shares, representing 35 per cent of the equity capital of MRL.

A press statement issued by Industrial Development Bank of India (IDBI) today also said that �the revised announcement of Rs 81.50 was not in line with the indicative offer made by B.K. Modi and V.K. Modi earlier to the institutions for acquiring the institutional shareholding in MRL.�

After deliberating various issues, �the consensus was that in order to protect the interests of the institutions and enhance shareholder value, the institutions themselves might make a counter offer,� the statement said.

IDBI, however, did not provide further details on the counter-offer being proposed.

The Modis originally set Rs 80 per share as the offer price but later revised it to Rs 81.50 per share.

In March this year, the Modis announced their plan to come out with an open offer to purchase 35 per cent of the company�s equity share capital at a price of Rs 80 per share.

They had then said that the acquirers will buy 87.64 lakh shares and the announcement was made on behalf of Vinay Kumar Modi, B.K. Modi, Modi Fashions and Securities Pvt Ltd and Modikem Ltd in concert with Witta International Inc and Sidh International Ltd.

The acquisition consortium along with persons deemed to be acting in concert, at present, holds over 58.58 lakh shares of MRL.


New Delhi, June 7: 
It�s time to call the bluff: there is a downturn in the global economies, but it isn�t impacting IT spending yet. Enterprises are continuing to spend more on information technology though they are becoming more judicious while making their investments.

The contrarian view has been expressed by Gartner Inc, the research advisory firm, which has surveyed 1500 chief information officers (CIOs) worldwide. Members of Gartner�s executive programs, which is a global network of CIOs spread across North America, Europe and Asia Pacific, were asked about the key business trends that were impacting their enterprises, their short and medium-term information services (IS) management priorities and IT technology priorities.

According to Partha Iyengar, country manager, India & Saarc, Gartner Incorporated, �In keeping with the increasing integration of world-wide trends, we find the results of the study are of key relevance in the Indian context. We project that the trend observed in the Indian market over the last two years�where IT is fast becoming a board-room versus a back-room issue�will continue unabated and enterprises will continue to increase IT spending levels to achieve business benefit.�

The group today previewed its two-day Summit 2001: Exploiting IT for business transformation to be held here from August 7.

In keeping with the current scenario of enterprises cutting their IT spends due to economic slowdown, the theme of the summit aims to address the need to continue investments in critical IT initiatives and, at the same time, show how to derive the most value from the US dollar.

The scheduled two-day event will showcase some of Gartner�s expert team of international analysts and consultants, who will discuss global trends in business & technology and highlight their relevance to the Indian business environment. Targeted at the business community, the Gartner Summit will provide value to chief executive officers, business managers, CIOs, business owners, technology vendors, investors and policy makers, by helping them understand how to separate e-business hype from reality and create strategies within a practical framework.


Mumbai, June 7: 
The controversial second phase of Dabhol Power Company (DPC) plunged into another round of uncertainty today, with the foreign lenders weighing a move to suspend construction of the project. The latter appointed global energy consultants Stone & Webster to evaluate �the cost of suspension� of the second phase of the 2,184 MW project promoted by US energy major Enron Corp.

While the Indian institutions had, on Wednesday, assured their foreign counterparts that the Centre was likely to step in and a solution to the Enron mess was in sight, the overseas lenders apparently did not buy this argument. �This (the central government�s intervention) has been repeated often,� the foreign lenders are believed to have said.

�The Indian lenders failed to convince their foreign counterparts, who, in turn, were in favour of the suspension,� sources said.

�The fate of DPC�s 1,444 MW Phase-II now hangs in the balance, as the project has been postponed till the issue of the rescinding of the power purchase agreement (PPA) is settled,� they said. As per the original schedule of the PPA, DPC�s Phase-II was to have been fired today.

Sources said Stone and Webster will review the second phase of the project. One of their aims will be to ascertain whether it is worthwhile to complete the mechanical part of the second phase.

According to a section of the participants at the meeting, the rationale behind completing the mechanics of the project was that in case Enron wanted to exit, the project will get a better valuation. Already, 92 cent of the project has been completed, with $ 1500 million committed to it.

On Wednesday, the Enron India managing director K. Wade Cline in his presentation before the lenders in Singapore, suggested a �temporary suspension� of the $ 2.9 billion project, R S Agarwal, executive director of IDBI, told The Telegraph here today.

Cline also provided detailed alternatives vis-a-vis a post-suspension scenario, with reference to power blocks and almost ready liquefied natural gas (LNG) terminal, sources said.

However, Agarwal, who headed the delegation representing the Indian financial institutions, said all the lenders unanimously agreed that Phase-I should restart immediately. They were of the view that the legal wrangles between DPC and the Maharashtra State Electricity Board (MSEB) should be kept in abeyance and a solution reached for offtake of Phase-I power.

The local lenders said the legal wrangling had complicated matters further, with no end in sight to the eight-month old imbroglio.

The foreign lenders felt the Centre should play a greater role in resolving the payments tangle, the sources said. They also felt the MSEB move, rescinding the PPA, had harmed their interests in the project.

When asked whether the foreign banks had given any indications of invoking the guarantees of the Indian institutions, sources replied in the negative.

Meanwhile, both the lenders continued to meet with representatives of individual foreign banks today. In a related development, the state government has decided to call the third round of the Godbole renegotiations committee on June 30. The Godbole committee, which met today, also discussed the state energy review report.


Mumbai, June 7: 
Jute baron Arun Kumar Bajoria today failed to appear before the Securities and Exchange Board of India (Sebi) for a hearing on his alleged violation of the latter�s takeover code while acquiring shares of Bombay Dyeing Ltd.

As a result, the hearing, which was postponed several times on previous occasions, was again postponed today. Bajoria did not appear personally, nor did he sent a legal counsel to represent himself. Instead, he dispatched a representation explaining his case, Sebi sources said.

�There was no indication till a representative from Bajoria�s side came with a letter later in the day,� sources said.

The letter is believed to have questioned Sebi�s jurisdiction in the matter as the department of company affairs was already deliberating the matter.


New Delhi, June 7: 
The Telecom Regulatory Authority of India (Trai) may propose stringent action against Bharat Sanchar Nigam Limited (BSNL) if it fails to settle the interconnect tussle with private telecom operators.

BSNL chief D.P.S. Seth has asked Association of Basic Telecom Operators (ABTO) to meet him and other officials on Friday to discuss the issue.

Trai chairman M.S. Verma and member R.R.N. Prasad today met a delegation comprising representatives of all six private basic operators who had approached the regulator to intervene in the issue.

�Today�s meeting lasted for more than one hour and the Trai chairman has promised �appropriate action� if BSNL fails to settle the issue,� sources said.

ABTO members who met Trai chairman included Rajan Mittal and T.R Dua (Bharti Telenet), Rajeeve Mehrotra (Shyam Telecom), A. Shankar (Reliance Telecom), Sanjeev Kanwar (Himachal Futuristic Communications Limited), S. Kesavan (Tata Telecom) and Parnav Roch (Hughes Telecom).

ABTO officials said, �BSNL cannot breach the agreement that was reached in 1999, which had the blessings of Trai. We had signed an interconnect agreement with the department of telecommunications as a �licensor� and also as a �licensee� (DoT as a service provider). Now, as a corporatised entity, it cannot go back on the same agreement.�

Under the interconnect agreement, BSNL carries forward the local, STD and ISD calls made by the subscribers of a private basic telecom company to any subscribers premises irrespective of the service provider.

A revenue sharing arrangement had been agreed by both parties based on the Telecommunication Interconnection Regulation, 1999, which allows private operators to retain 60 per cent of the revenue from a call while the remaining 40 per cent should be handed over to BSNL. However, BSNL has now asked these companies to revise the interconnection charges, which has been opposed by private operators who have also filed a case before Trai.

WiLL rental floor

After much deliberations, BSNL has finally approached Trai for reconsidering the imposition of floor price of Rs 450 as monthly rental for wireless in local loop (WiLL) or limited mobility.

�BSNL has just written to Trai for reconsidering the floor price of Rs 450 for limited mobility rentals,� BSNL sources said.

The written communication to Trai comes after much deliberation within the corporation on the legal implications of the proposed move, even as communications minister Ram Vilas Paswan had last month clearly stated that the corporation would challenge the floor price.

�The corporation was taking legal view on the matter of approaching Trai for review of the floor prices. There were considerations of tariff fixing powers of the regulator also,� they said.

The corporation has linked the floor price of Rs 450 to aspects of affordability for the masses and said that the floor price was discriminatory to the extent that it was not imposed on any other service. Paswan had earlier said although the fixing of telecom tariff was within the jurisdiction of Trai, this tariff was a major setback to BSNL�s plans for increasing the telephone service in rural areas.


Mumbai, June 7: 
The course of the battle for control of VST Industries may well be set tomorrow when the Securities and Exchange Board of India (Sebi) meets to decide whether those investors who have already bitten the Russell Credit bait can switch over to the higher offer of Bright Star.

Legal sources told The Telegraph that investors can rescind their earlier acceptance unless the terms and conditions of the open offer specifically state otherwise. An official from a top Mumbai-based solicitor firm added that there is a provision in the takeover code for such withdrawals.

When contacted, John Band, chief executive officer, ASK-Raymond James, which is managing Bright Star�s offer pointed out that they were armed with a �very respectful� legal opinion which stated that investors who had once accepted a particular open offer, had the right to withdraw the same and accept another offer. �This is a basic contract of law matter and we are hopeful of the Sebi giving a positive ruling in this regard tomorrow,� he said.

According to Band, if the market regulator gives a positive ruling, the Damanis will print the withdrawal forms to enable investors, who had accepted the Russell Credit offer, to switch over to Bright Star�s offer of Rs 151 per share. The dispute has arisen because certain shareholders who had earlier subscribed to the offer of Russell Credit wanted to switch over to the higher price offered by the Damanis.

While Sebi has ruled that such shareholders who have already placed their shares with Russell Credit cannot switch over to rival offer, the Damanis have opposed this ruling under sections 5 & 6 of the Indian Contracts Act.

These sections state that the shareholders who had tendered their shares to one offer can withdraw the same as long as the offer remained open. Both the offers close on June 13.

Sebi officials, were however, unwilling to give out further details on tomorrow�s meeting. ``We will take a decision tomorrow�� was all that a senior official had to say when asked on the subject. In the BSE today, the VST scrip finished at Rs 148.95 after opening at Rs 144 and rising to an intra-day high of Rs 150. The counter witnessed 335 trades, resulting in a turnover of Rs 25.75 lakh.

With less than a week left for both the open offers to close, the battle for control of VST yesterday saw ASK-Raymond James asking Sebi to investigate what it called suspicious price movements in the tobacco company�s scrip and it had alleged that there were attempts being made to manipulate the price of VST shares.

While the scrip is in the no-delivery period, ASK had said that neither Bright Star or its associates had bought any of these shares.


Calcutta, June 7: 
George Williamson (Assam) Limited, rechristened as Williamson Tea Assam, is on a consolidation spree.

The company has drawn up a consolidation plan that envisages recruiting people in key areas and developing a domestic market for its tea. It has also decided to put on hold acquisition of new gardens in Assam.

Philip Magor, chairman of George Williamson is coming to the city this month to discuss the future plans of the company.

Managing director S. K. Mitra said: �We had been looking for acquiring properties in Assam. But there are no good properties on offer. So we have decided to put the move on a hold for the time being and will consider good offers when we get them.�

�Our board meeting is slated to take place in the third week of June. We expect good results, which will substantially increase shareholder value.�

The company�s net sales stood at Rs 191.73 crore for the year ending March 31, 2000, and net profit was at Rs 28.98 crore. For the third quarter ending December 31, 2000, the company registered a sales of Rs 57.02 crore and a net profit of Rs 12.74 crore.

After the split between the Magors and the B.M. Khaitan group, the company is also embarking on a recruitment drive. Sources said a senior official from Carrit Moran is expected to join soon. Confirming the move, Mitra said, �We will be recruiting people in key areas.�

Developing the domestic tea market is another important area of emphasis for the company. �At present, we will sell our tea through auctions. But gradually, we will build up a separate identity for our teas,� Mitra said.

George Williamson (Assam) has 17 estates located in Assam, each one equipped with an in-house factory for processing tea leaves. Its total production stands at 20 million kgs. The company has a 5 per cent share of the 403.6-million kg Assam market.

Regarding the dispute over the Williamson brand and logo, Mitra said discussions are on between the two groups and things are likely to be sorted out soon.

As far as exports are concerned, the company has little to worry. It has an efficient distribution network, specially in England and other countries, and has access to international hard currency markets.


Mumbai, June 7: 
Wockhardt Ltd is reworking its generic business strategy following the termination of its alliance with Sidmak Laboratories of the US. It is now planning to enter into product-based alliances with generic marketing companies in the US.

The pharma major feels that generic business has strong growth potential, said sources in the company. Wockhardt will also concentrate on markets in the US. It has already filed with the US FDA five bulk actives � Nizatidine, Fluconazole, Ciprofloxacin, Loratadine and Doxazosin.

The company is conducting research on developing new chemical entities and novel drug delivery systems.

The sources said that Wockhardt will focus on single therapeutic group like anti-infectives.

The company has filed applications for 11 new chemical entities. Of this, one has been approved by the drug authorities. In the previous fiscal, the company had invested over Rs 40 crore in research.

At present, three new entities, including two anti-bacterial entities, are at various stages of pre-clinical trials.

Wockhardt is planning to out-license arrangements with global pharma companies for marketing these compounds.

Wockhardt had terminated the agreement with Sidmak, which is one of the 10 largest generic drug companies in the US, in the previous year saying that products launched through the alliance was far below its expectations.

It was reported that Wockhardt was disappointed with sales of two products, Ranitidine and Enanapril Maleate.

The company now plans to split 15 products targeted for the US generic market into four or five products each which will be allocated to various companies.

Anti-infectives account for 25 per cent of Wockhardt�s sales. This is followed by pain killers, vitamins, nutrients, medical nutrition and others.

It claims that Biovac-B, the hepatitis B vaccine developed through in-house biotechnology research, has been the most successful new brand launched in the company�s history. The size of the brand is not expected to top Rs 30 crore.

Recently, the company made a foray in the anti-diabetic segment through Zidmin. It also entered into a co-marketing agreement with Bayer AG to market Acarbose, an anti-diabetic drug.



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