VST stake spat simmers
Hind Lever first-half net profit leaps 21%
R.H. Patil at the helm of Divestment Commission
Slump takes Telco deeper into the red
Modis scout for partner after open offer
ABB offspring thrives but parent suffers
HPL ready to cede control to Indian Oil at fair price
Hind Motors may garage its Contessa
Mitsubishi Trium for AirTel, BPL
Foreign Exchange, Bullion, Stock Indices

Calcutta, July 24: 
The warriors in the VST stake battle have not called it a day. Not when ITC and the Mumbai-based Damanis of Bright Star Investment say they are open to buying out each other in the country�s second largest cigarette firm.

Even BAT, the promoter of VST with just over 32 per cent of the shares, is willing to raise its stake in the company, but has not sought the ITC approval that is mandatory under foreign investment norms.

�The papers for Foreign Investment Promotion Board (FIPB) approval are being prepared,� a BAT spokesperson said. She said her company was going ahead with a long-declared plan to increase its holding in VST, though she would not say how soon.

ITC chairman Y.C. Deveshwar told The Telegraph that his company would like to increase its stake in VST to 25 per cent, and it could consider acquiring Bright Star�s shares, �if they are available.�

On the other hand, John Band, chief executive of ASK Raymond James, the investment banker managing Bright Star�s investments in VST, said the Damanis are open to buying out ITC subsidiary Russell Credit�s shares if it wants to leave.

Russell Credit has acquired about 10 per cent in the Hyderabad-based VST through direct market purchases and an open offer, while Bright Star picked up 20 per cent, 15 per cent of which was garnered through open market purchases, while the remaining was soaked up in an open offer.

Institutional shareholders, who control 17.7 per cent in VST, did not participate in the open offers. The Andhra Pradesh government holds 4.7 per cent in the company while the public holding has declined from 29.5 per cent to 15.5 per cent as a result of the open offers, which closed on June 13.

Commenting on BAT�s plan to hike its stake in VST, Deveshwar said the UK-based tobacco major had not sought ITC�s consent for it. �The ITC board has not taken a decision on the matter. It will do so when BAT seeks our consent,� he added.

ITC investment

Deveshwar said Bhadrachalam Paperboards, an ITC subsidiary, has dropped merger and acquisition plans as it could not identify a firm which would have added value to its operations. �The company would go ahead with its greenfield expansion plans, and invest about Rs 1,000 crore over five years, he added.

Speaking on the investment plans of ITC Hotels, Deveshwar said: �ITC Hotels has lined up a number of new projects, and the company will be investing Rs 400-500 crore in this fiscal.�


Mumbai, July 24: 
Hindustan Lever (HLL) today reported a better-than-expected 20.8 per cent leap in first-half net profit at Rs 806.12 crore against Rs 549.35 crore in the same period last year. The bottomline boost came on the back of a modest 1.5 per cent rise in sales at Rs 5573.76 crore compared with Rs 5493.79 crore in the January-June 2000.

What was remarkable was the way 30 power brands �picked as growth engines � bettered the overall sales increase of 1.5 per cent and went on to grow at a heady 4.8 per cent in the first six months, and 5.7 per cent in the three months to June. The first-half net profit has been propped up by income from the sale of animal feeds and Quest businesses.

Buoyed by the surge, the Lever board declared an interim dividend of Rs 2.50 per share on a face value of Re 1 (Rs 1.50 per share for 2000). �The dividend includes distribution of exceptional profits and is a one-off accrual,� finance director D Sundaram said. The payout will cost the company Rs 550 crore and, with the dividend tax, the figure will go up to Rs 606 crore � around 75 per cent of the net profit.

Investors greeted the result by driving up the Lever share Rs 1.35 to Rs 217.35 on the Bombay Stock Exchange (BSE) in a session where marketmen had discounted the results.

Announcing the results, M S Banga chairman said: �The three-pronged strategy outlined earlier this year is now being implemented. Our people, innovation and advertising resources are focused on the 30 new brands and steps have been taken to enhance the profitability of our foods business.�

He said a part of the profits from the sale of divisions would be ploughed back to strengthen the long-term growth prospects of the core business.

Operating margins improved 1 per cent, largely because of the company went for a better portfolio mix in the foods business, launched strategic cost-control initiatives and reaped the gains of restructuring plans implemented in the past.

Power brands in the home and personal care businesses grew 9 per cent compared with the 5.3 per cent increase in overall group sales. The foods business turned more profitable after unviable parts of it were rationalised and costs slashed.


New Delhi, July 24: 
The government today reconstituted the Disinvestment Commission with R. H. Patil as its new chairman. Initially appointed for a two-year term, the commission will largely have an advisory role. The final say on its recommendations will be vested with the government, an official statement said.

At present, Patil is the chairman of the Stock Clearing Corporation of India and is on the board of National Stock Exchange (NSE), SBI Caps and the Reserve Bank of India�s Standing Committee on money markets.

The previous commission, headed by G. V. Ramakrishna, had given recommendations on the divestment of a large number of public sector companies referred to it. However, most of its recommendations have either not been implemented or been only partially implemented. Consequently, the commission had serious differences with the government on the way the disinvestment issue was being handled and over the scope of the panel�s powers.

The Divestment Commission headed by Ramakrishna was finally given a decent burial by the BJP government, despite protests by various political parties which wanted it to be revived. The demand for its revival has resurfaced whenever there have been controversies surrounding disinvestment deals.

Possibly to curb any future controversies, as well as to retain the final say on the fate of the public sector units, today�s statement made it clear �the (new) commission shall be an advisory body and its role and function will be to advise the government on disinvestment in public sector units that are referred to it by the government.�

Among the new commission�s terms of reference are protecting the interests of workers, employees and other stake holders in public sector units, as well as advising the government on other matters relating to disinvestment, which may be specifically referred to it. The statement said other members of the commission will be appointed soon.


Mumbai, July 24: 
Tata Engineering & Locomotive Company Ltd (Telco), the beleagured auto major, has plunged deeper into the red and suffered a loss of Rs 98.9 crore for the first quarter of this fiscal as against a loss of Rs 74.34 crore in the same period of the previous year.

During the quarter, the company�s topline was also declined by 6 per cent to Rs 1697.38 crore compared with Rs 1797.66 crore.

Explaining the dismal performance, Telco said the market for commercial vehicles continued to be affected by the economic slowdown, resulting in a 14 per cent decline in overall industry volumes. While medium and heavy commercial vehicles were badly hit, the light commercial vehicle (LCV) segment saw a 26 per cent decline in sales in the first two months.

Telco, however, added that it will remain focussed on its strategic initiatives, cost reductions, product launches and continuous restructuring of assets and manpower. �Market conditions are difficult, both in India and abroad, but these measures will help to minimise the adverse impact on the company,� Telco said.

Though the auto major�s losses were along the expected line, the Telco scrip surged by over 11 per cent on the Bombay Stock Exchange.

Market observers said the sharp spurt in the scrip was due to rumours that the company was in advanced stages of negotiations on hiving off its car venture.

The Telco scrip finished higher at Rs 77.50 after opening at Rs 70 and rising to an intra-day high of Rs 78.50. The counter witnessed 4263 trades, resulting in a turnover of Rs 5.58 crore.

Leyland prunes loss

Ashok Leyland�s net losses have come down by 52.23 per cent to Rs 9.4 crore during the quarter ended Jun e30 from Rs 19.7 crore in the same quarter of last year. Net sales (6446 vehicles) during the quarter rose to Rs 583.1 crore from Rs 444.7 crore (6441 vehicles) in the corresponding quarter of the last fiscal.

Cash profit was higher at rs 155.23 million as against rs

10.6 million during the same quarter of the last fiscal.

Raymond loss

Raymond Ltd has posted a lower net loss of Rs 4.64 crore for the first quarter ended June 30 this year compared with a net loss of Rs 36.17 crore in same period of previous fiscal.

Net sales from operations was lower at Rs 132.14 crore in Q1 as against Rs 326.83 crore in corresponding period of last year.


New Delhi, July 24: 
With their long drawn-out open offer ending successfully, the Modis seem all set to find a partner for their tyre business, which they were keen on spinning off into a separate business.

�The issue of looking for a foreign partner is not new,� said Bhaskar Sharma, chief executive (strategy) at Modi Rubber Ltd. The company has been scouting for a strategic partner for a long time.

Continental AG of Germany and Modi Rubber have had talks several times in the past, he said. �Both sides have shown interest in a tieup but we have not yet reached a stage where we could seal the deal,� Sharma added.

However, there have been no talks as yet with Continental AG since the open offer closed. This could happen after a while. Besides the German company, several other foreign tyre companies are likely to approach the Modis.

Asked if these included Michelin of France and Bridgestone of Japan, Sharma said he was not aware if they had individually approached managing director B.K. Modi. They were �too big� for MRL, he added.

BK Modi has gone out of the country and was not available for comment.

Sharma said as far as MRL was concerned, the shares tendered by LIC in response to the open offer could not be withdrawn and said there were several precedents to support that view. However, the company would wait to see how the legal wrangle is sorted out by the courts.


New Delhi, July 24: 
Asea Brown Boveri India Ltd has bucked the worldwide trend at the premier electrical-engineering group by reporting a 24 per cent rise in net profit at Rs 14.4 crore in the first half of 2001 even as its parent�Zurich-based ABB Ltd�saw its net income plunge 76 per cent to $ 266 million forcing it to announce plans to axe 12,000 jobs, about 8 per cent of its 160,000 global workforce. �We have not heard anything from our headquarters. The Indian company has performed well. We don�t see any reason why the job cuts should take place here,� said a senior executive with ABB India.

�The Indian company is not a fully owned subsidiary of ABB Ltd. Only 52 per cent is held by the parent company while rest is with the public. Our result forms only part of ABB�s end-year results not the quarter results,� he added.

ABB Ltd said the job cuts, to take place over 18 months, will cost $500 million.

However, officials at the Indian operations admitted that the worldwide freeze on recruitments announced earlier this month was being implemented in India.

ABB Ltd�s operating profit dropped 21 per cent to $ 626 million while sales were little changed at $11.1 billion.

ABB India, on the other hand, recorded a 35 per cent jump in first-half revenues at Rs 434.1 crore as against Rs 321.2 crore last year. �The revenue growth is expected to continue supported by our strong current order backlog of Rs 690 crore. We will continue to focus on all domestic and overseas opportunities to maximise our order intake, especially in the power transmission and distribution sectors where we see encouraging signs,� said K.K. Kaura, managing director of ABB India in the press statement.

The board of ABB India Ltd also approved the amalgamation of ABB, Instrumentation Ltd, Introl (India) Ltd, ABB Lenzohm Service Ltd and ABB Analytical Ltd (all fully-owned companies of Asea Brown Boveri Ltd, Zurich) with Asea Brown Boveri Ltd, India.


Calcutta, July 24: 
Haldia Petrochemicals Limited (HPL) managing director Richard B. Saldanha says he is not opposed to the idea of selling a majority stake in the project to Indian Oil Corporation (IOC) if he can get a fair price for the shares.

�This remains my personal view. After all, Indian Oil is a Fortune 500 public sector company with a continuous track-record of making profits,� Saldanha told The Telegraph.

Asked whether the private promoters, mainly The Chatterjee Group, will accept the sale of a controlling stake to a public sector company, Saldanha said it is not a question of a PSU or a non-PSU, but the fact that a profitable company is coming in as a partner. �But again, this is my personal view.� The Chatterjee Group and West Bengal Industrial Development Corporation (WBIDC) hold 43 per cent each, while the Tatas control the remaining 14 per cent in the project.

Saldanha�s remarks come at a time when differences have cropped up between the oil major and HPL on the valuation of the plant. �It is true that there is a gap between the two companies. There is always a difference in the value as perceived by a buyer and a seller. This happens in all acquisitions. Then, there are offers and counter-offers,� he said.

Indian Oil values the plant at Rs 3,500-4,000 crore while HPL feels it should be Rs 6, 500 crore, a chasm Saldanha says has been partly narrowed down.

�We feel that a clear picture will emerge after a few rounds of talks. The HPL board will meet IOC at the end of this month to discuss the matter,� he added. He described as positive the due diligence report submitted by KPMG Peat Marwick. IOC officials declined comment, saying the matter was �extremely sensitive�. Though Saldanha refused to quantify the �fair price�, he said HPL was working hard to increase its sales volumes, revamp its internal business processes, improve margins and implement a tight cash management plan to win a better deal.

Outlining the steps to be taken to reduce HPL�s debt until IOC agrees to move in, Saldanha said a plan to increase cash flows is ready, and talks are being held with financial institutions and the consortium of banks to work out a loan-recast strategy.    

Calcutta, July 24: 
With sales of the Contessa plummeting to 250 units, Hindustan Motors is considering a move to discontinue production of the car at its Uttarpara plant.

�It is not economical to continue with a car line whose sales are so low. We will review the matter by the end of this calendar year and decide whether to discontinue with the car,� A. Sankaranarayan, managing director, said.

The company was able to sell only 55-60 Contessas in the first quarter of this fiscal, a far cry from the 1,500-1,600 units it sold in the first few years of its launch.

The losses in the first quarter ending June 30, stand at Rs 25.77 crore. Sales have also plummeted to Rs 218.22 crore from Rs 268.64 crore in the previous corresponding period.

HM also plans to import and market the Mitsubishi Pajero in January next year. The Pajero, which will be imported from Japan, will be priced at Rs 30 lakh. The company expects to sell 200 cars in the first year of launch. The marketing of Pajero in the country has been delayed due to some certification problems, HM chairman C. K. Birla said.

Addressing shareholders at the company�s 59th annual general meeting, Birla said, �The passenger car industry has been passing through difficult times. This has affected the company�s turnover and margins in the last two years. In response to this, the company has initiated several steps to bring about improvement in its working. These include aggressive cost reduction measures, continuous attention to improvement in management systems, introduction of CNG vehicles and increase in the spread of the new CNG-based RTV. We are also trying to restrict cash losses from the third quarter. We expect the car market to grow from the third quarter.�

The company has repaid a Rs 186-crore loan last year and will repay another Rs 23 crore in the current fiscal. Moreover, it has set a higher sales target of 30,000-32,000 cars this year. Last year, the company sold 28,000 cars.

Commenting on the future of the Uttarpara plant, Birla said there will be a reduction in the number of employees this year, which will reduce overhead costs. �We expect the voluntary retirement scheme to prune 600-1000 people, while about 400-500 people will retire normally. The present staff strength at Uttarpara is 9,5000.�The company also plans to enter the medical transcription business, even though it has no relation with its present business. Sankaranarayan said, �We have space and people and we are redeploying them in a gainful way. We have started imparting training to them. However, the business is yet to take shape.�

Shareholders at today�s AGM put all the seven resolutions, including adoption of the accounts, to poll.


New Delhi, July 24: 
Mitsubishi Electric is likely to provide the mobile handsets to AirTel and BPL Innovision for the GPRS-based mobile service. The General Packet Radio Service (GPRS) is a technology that allows packet-based high speed data transmission over a mobile network. Data is broken into smaller chunks called packets; each chunk carries an address from where it came and where it is going to. All packets in a single message do not have to travel along the same path. The destination computer re-assembles the packets into their proper sequence.

GPRS marks an advancement over the GSM (Global Systems for Mobile Communications) that the mobile telephone service providers use in India. GPRS can combine eight channels to offer transmission speeds of up to 115.2 kilo bits per second. It also offers an �always on� feature, with users being charged by the bit, rather than by the minute.

Mitsubishi Electric claims to have already set up a pilot project with both telecom service providers. It will offer Trium brand of mobile phones through H.A.T. Trade Ltd, which is part of the global distribution company of Mitsubishi Electric Telecom Europe.

As part of its retail strategy for deeper market penetration, H.A.T. Trade Ltd. has decided to appoint 72 exclusive showrooms all over India called �Trium Avenues�. These Trium Avenues will be the company�s dedicated showroom exclusively selling Trium range of mobile phones.

Each Trium Avenue will appoint 10 Trium Junctions, creating a network of 720 retail outlets. The company plans to spend about $ 1 million to set up Trium Avenues.



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