HPL seeks more sops from FIs
SBI slashes deposit rates
Andrew Yule move to get back into black
Brands must die to come alive

Calcutta, Sept. 8: 
The management of Haldia Petrochemicals Limited (HPL) today sought further reliefs from financial institutions and banks regarding reschedulment of its high-cost debt.

The company had earlier asked banks and FIs to reduce the interest rate on its loans. The HPL management today asked them to defer the payment of rescheduled interest. The company�s top brass, led by managing director Richard B. Saldanha, today met FI and bank officials, including those of the Industrial Development Bank of India (IDBI), ICICI, IFCI and State Bank of India (SBI) at ICICI�s office in Mumbai.

Sources said the FIs and banks have assured the HPL management that they will consider the proposal and convey their decision soon.

�They will have to first ratify the proposal at their respective boards before taking a final decision. No discussions were held on whether the FIs will issue preferential shares against the Rs 500-crore bridge loan which IDBI had extended to bridge the Rs 969-crore equity shortfall,� sources added.

This cannot be taken up as yet since the state government has not decided who will finally hold a majority stake in the project.

�In the first phase, only a Rs 3,200 crore debt will be rescheduled,� sources added.

HPL had taken a loan of Rs 1,017 crore from the FIs and Rs 1,154 crore from the banks for financial closure.

Lenders to the project include IDBI, Exim Bank, GIC, ICICI, IFCI, IIBI, Life Insurance Corporation of India, National Insurance Corporation, Oriental Insurance Corporation, Unit Trust of India, SBI, Allahabad Bank, Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Dena Bank and Federal Bank.

The loans carried an interest rate between 17-19 per cent. The total outgo on account of interest is in the region of Rs 350 crore.

The project had also taken suppliers� credit of Rs 457 crore from the Japan Exim Bank and external commercial borrowings worth Rs 563 crore.

HPL has asked the FIs and banks to rework the interest rate to around 8-11 per cent.

The FIs and banks have already granted a one-and-a-half year moratorium on loan repayment starting from April this year and ending September 2002. In the first six months of the current year, HPL has already saved almost Rs 170 crore on interest payment.

�While on one hand we do not want HPL to become a non-performing account, on the other hand, we have to be careful about reducing interest rates below the prime lending rate,� FI sources said.


Mumbai, Sept. 8: 
The State Bank of India (SBI) today reduced interest rates on term deposits by 25-75 basis points.

The new interest rate for term deposits with maturities of 180 days to less than a year is now 6.75 per cent from the previous level of 7 per cent.

For deposits with maturities of two years to less than three years and for three years and above, the rates have been slashed to 8 per cent and 8.50 per cent respectively.

These changes would be effective from September 10. This is the second time in two months that the banking behemoth has cut interest rates. The last rate cut was in August.

Sources said other nationalised banks are also likely to follow suit.

The latest round of disincentives is unlikely to act as a dampener and deposit growth has been surging over the past few months in the banking sector as a whole, they added.

Figures for the fortnight ended August 24 released by the Reserve Bank of India (RBI) also confirm this trend.

Aggregate deposits of scheduled commercial banks in the fortnight rose by Rs 5,311 crore to Rs 1,030,139 crore.

One of the major reasons responsible for the surge in bank deposits has been the dismal state of the country�s capital markets. Further, investor confidence in mutual funds has also taken a beating following the US-64 controversy.

Though investors have found banks a safe haven in which to deposit their surplus cash, banks themselves are reeling from the impact of a poor credit offtake, thanks to the prevailing economic slowdown. Moreover, with the liquidity position remaining at a comfortable level, companies increasingly find it easier to raise resources at much lower rates in the debt markets.

In fact, the yield on the benchmark 10-year government security recently plunged to a new low.

Sources feel in such a scenario, banks are raising resources at lower rates by reducing interest rates on deposits.

�The present deposit surplus means banks can get away by lowering interest rates. In doing so, they can also raise funds at lower rates, thus protecting their spreads,� an analyst explained.

With prevailing rumours of an impending bank rate cut by the RBI, banks may again bring down their lending rates and even deposit rates.

The State Bank of India today announced that interest rates for domestic term deposits of Rs 1 crore and above, for a period of two years to less than three years, have been brought down to 8 per cent from 8.50 per cent, while rates for deposits of three years and above have been reduced to 8.50 per cent from 9 per cent.

Though the bank did not revise interest rates on deposits with a maturity period of seven days to 14 days, it announced a 25-50 basis point reduction in interest rates payable on deposits of senior citizens.

In this case, interest on deposits with a duration of one year to less than two years has been brought down to 8.75 per cent from 9 per cent, deposits of two years to less than three years will now be 8.75 per cent from 9.50 per cent. Similarly, for deposits of three years and above, it has been reduced to 9.25 per cent from 9.75 per cent.


Calcutta, Sept. 8: 
Andrew Yule & Co will construct a multi-storied complex near its headquarters in the city�s downtown BBD Bagh area. The project, involving an investment of around Rs 12 crore, is expected to rescue the 138-year old company, which suffered losses of over Rs 22 crore last year.

Sources said the cash-strapped company plans to lease the proposed building and has approached various public sector enterprises, including Oil and Natural Gas Corporation, to mobilise the required funds for the project. The building, to be constructed on 22 cottahs of land adjacent to Yule House, will have an area of around 41,000 sq feet.

The company has proposed to lease out the space for Rs 12 crore, of which Rs 4 crore will be treated as rent in advance for 46 years and the remaining Rs 8 crore as premium.

Andrew Yule badly needs the funds for the project in order to avoid heavy losses again this year, which might lead it to the Board for Industrial and Financial Reconstruction, sources said. The premium of Rs 8 crore will help the company to book a profit in its accounts.

The company, however, needs the money up front to construct the building as it does not have any internal resources, sources said. They added the project is expected to be completed in two years� time.

Earlier, Andrew Yule received the Calcutta high court�s permission to construct a building and sublease it till 2048 on the land, which is owned by a trust. However, the company plans to seek an extension of at least 27 years for the lease. The trust has around 120 sebayets (trustees).

Andrew Yule has also embarked on a business and financial restructuring exercise.


New Delhi, Sept. 8: 
This must sound like a crazy paradox: a brand needs to die every two years to reinvent itself and stay relevant. Why? Blame it on the fast-moving consumer who is increasingly finicky, more fickle in his taste, less loyal to a brand and more insistent on a product that is customised to his tastes.

Speakers at a seminar on �Changing Preference: The Fast Moving Consumer� reckoned that brands need to be re-invent themselves to keep themselves �fresh and relevant�.

�Brand Gillette has to die every two years to come back again,� said the shaving systems and blade makers marketing director Manoj Kumar. It�s rather like reincarnation � the soul of the brand remains, but the body changes. The brand image changes in tune with the changing times and evolving consumer preferences.

Various consumer studies undertaken by ORG-Marg, the marketing research outfit, reveal that fast-changing consumer preferences are a market reality, especially in the metros and among the upper strata with a strong trickle-down effect on other sections of society, said Sangeeta Gupta, associate vice president of the research organisation.

Consumers are more demanding, finicky and individual self-driven in buying products rather than social self-driven, said Gupta who was speaking at the seminar organised by the marketing club of the Faculty of Management Studies (FMS) Delhi. Consumer preferences in urban centres are shifting towards �understated� and �muted� and �subtle� sensory effect than loud ones.

Shopping is becoming more of an experience than a chore. However certain things are hard to change, she said as in food. The Indian consumers are most open to change in quasi-meal and snacks, but are more averse to changes in the main meal.

Ashok Bhasin, VP (marketing) of Whirlpool India, said the customer was more individualistic today with clear concepts of �my kind of� soap, phone, or car. The customer today is seeking brand variety and not brand loyalty. To fulfil these needs mass customisation is emerging to be crucial.

Former Compaq India MD Abhishek Mukherjee said in the PC industry today, customisation in synthesis with the mass production plant, is becoming very important following the successful Dell model.

�Consumers want brand variety; so it�s better your brand provides that rather than your competitor,� said Kumar. He added that Gillette was introducing new products faster than ever before. In tune with the increasing customised needs, direct marketing will be more effective in the years ahead rather than one-cap-fits-all kind of advertising. This holds true, of course, for the products as well, he said.

Bhasin said in India, price advantage can easily replace relationship with the brand and only brands that go beyond the functional will be less vulnerable and even be able to charge a premium.


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