Stock pile-up forces cut in tea output
Govt sets April 1 date for Net telephony
ITC net profit spurts 29%
Six in race to advise on Maruti selloff
Farm sector growth forecast at 7%
Sebi makes segment reporting voluntary
DPS set to step on Bata toes
Philips back in black with Rs 8.7 cr profit
Fresh setback to IBP selloff
Foreign Exchange, Bullion, Stock Indices

Calcutta, Oct. 19: 
The cup of woes is brimming over � tea producers in north India are waking up to a harsh new reality of having to slash output, shed workers and call for tax breaks amid swelling stocks and plunging prices.

Plucking stops in the gardens of Assam Valley from December 1, and in Dooars, Terai and Barak six days later, as part of the efforts by edgy producers to rein in the output of CTC variety by about 20 million kgs. The production target has been revised to 835 million kgs this year.

Companies have decided to persuade states and unions about the need to rationalise workforce as a cost-cutting device to tide over the crisis. The industry employs a million people directly and close to 3 million indirectly.

Even as output is squeezed, there is a plan to step up production of the premium orthodox tea, raising it by 20 million kgs from next year. This is expected to improve the skewed CTC-to-orthodox production mix and help cater to the massive demand for the premium variety abroad. The 80 million kgs produced this year � of the total 525 million till August � was exported at handsome prices.

Addressing a press conference here today, Indian Tea Association (ITA) chairman Bharat Bajoria said: �Prices have dropped sharply from June due to a glut of plain CTC and fears of lower exports this year. This, combined with a cost escalation, has pushed large sections of the industry into a cash crunch. After meetings with all strands of the Indian tea industry and Consultative Committee of Plantation Associations (CCPA), we have drawn up a short-term plan to remove imbalances and bring stabilise tea prices.�

There are indications that production cuts will not be restricted to north India, and are likely spread to south India during its lean season in the month of June. The CCPA will also ask small growers and leaf-processing factories in the northern region to prune output.

According to Bajoria, 14 million kgs lie unsold at tea auctions, hammering prices to levels below the cost of production. �However, the cut-backs in output will not create a shortage of tea in the country. We expect prices to look up in the coming months,� he added.

The ITA chairman said there will be no plucking until demand matches supply. �That could mean the beginning of the new season in late February or early March,� he said.

Talking about the impact on jobs, he said a study would be commissioned soon to determine how many workers are enough to ensure healthy margins. An industry-wide voluntary retirement scheme could then follow.

To facilitate an increase in production of the orthodox variety, the Tea Board has approved a scheme that would allow a 25 per cent capital subsidy on purchase and installation of equipment used in processing.

The CCPA has submitted a detailed proposal to the central government for increasing the rate on duty entitlement passbook scheme (DEPB) from 2 per cent to 10 per cent on exports of orthodox/green tea.

It has also constituted an expert committee comprising producer-exporters and merchant-exporters to draw up a plan to expand the markets for orthodox tea overseas. Russia, Syria, Tunisia, Iran and Iraq are among the countries targeted as the main export destinations.

The industry has requested Assam and Bengal to withdraw cess on green leaf as a temporary measure to help bring down costs till tea prices turn remunerative.

The RBI and banks have been requested to consider an increase in credit limit and a cut in interest rates from 3 per cent above the prime lending rate to 2 per cent.


New Delhi, Oct. 19: 
Internet telephony will be a reality from April 1 next year, communications minister Pramod Mahajan announced today, while maintaining a brave face on the controversial Sankhya Vahini project.

Announcing several initiatives for the three departments�telecommunications, posts and information technology�under his ministry, Mahajan said the Sankhya Vahini project would go on, with or without a new partner. A day after the Carnegie Mellon University pulled out of the project, the minister claimed the pullout would not be a setback. �My project does not depend upon anyone,� Mahajan shot back when it was pointed out that the RSS had vehemently opposed the inclusion of IUNet in Sankhya Vahini.

�It is not a setback. The government has not withdrawn from the project; it is a private company that has withdrawn. The BSNL board will take the necessary steps after yesterday�s decision by one of the partners. BSNL will now implement the project either on its own or find a join venture partner,� he told the Economic Editors� Conference.

The government is also waiting for Presidential assent to the proposal of merging the communications and information technology ministries, expected to come through by next week. Following the merger, it will be christened the communications and information technology ministry.

Another initiative announced today was a tieup between the Department of Posts and the Industrial Development Bank of India (IDBI) to provide loans and set up ATMs at post offices.

The loans will be offered against small savings certificates. The DoP also plans to expand the e-post facility to 840 district post offices.

Further, the department of information technology plans to provide a two mega bits per second connectivity to 257 universities, 800 engineering colleges and 250 medical colleges by December 2002 and 128 kilo bits per second link to 60,000 schools in the next two years, under the Vidya Vahini project.

Announcing initiatives for the telecommunications sector, Majahan said internet telephony would be opened up and said the government will give a thrust to wireless in local loop technology-based mobile phones. The ministry plans to provide WiLL-based mobile phones in 22 cities by the year-end.

Mahajan said the move would not affect the bidding amount of VSNL, adding the disinvestment would be completed by this fiscal.

The communications ministry has already requested the Telecom Regulatory Authority of India (Trai) to send its recommendations on internet telephony.

Reliance Industries, the Tatas and BPL are left in race for acquiring the government�s equity in VSNL after major telecom players like Bharti pulled out of the race and others were disqualified due to their involvement in the stock market scam.


Calcutta, Oct. 19: 
ITC Ltd, the tobacco-to-hotels major, today recorded a 29 per cent rise in net profit and a 12 per cent growth in topline for the quarter ended September 30. The company�s profit in the first half grew by 25 per cent while net income increased by about 8.5 per cent.

Net profit during the quarter at Rs 333.61 crore was Rs 75 crore higher than the corresponding period of last year. Net income for the quarter at Rs 1167.27 crore was about Rs 126 crore higher.

The market was expecting profit growth of around 20 per cent for the quarter. Even the topline growth was better than expectations on the street. Impressed by the robust results for the second quarter, the ITC stock closed Rs 16.65 (2.5 per cent) higher at Rs 693.05 on the Bombay Stock Exchange today.

In the first six months of the financial year, ITC has registered a net income of Rs 2241.58 crore, which was over Rs 176 crore higher than last year, while its net profit in the first half at Rs 634.28 crore was Rs 126.69 crore higher.

A company release said, domestic cigarette volumes continued to be under pressure due to steep increase in excise duties imposed in the last Union budget. The company, however, claimed that the margin of decline in volumes was narrowing down.

�Apart from continuing to invest in brands, the company�s fast moving consumer goods business is engaged in strengthening its distribution reach to support the planned entry into packaged food business,� said an ITC release.

ITC Hotels loss

ITC Hotels posted a loss of Rs 2.48 crore in the quarter ended September 30, as against a profit of Rs 59 lakh in the second quarter of last year. The loss in the first half of the year was at Rs 1.68 crore as opposed to a profit of Rs 1.64 crore in 2000-01.

The company�s income during the quarter at Rs 26.56 crore was about 15 per cent lower, while income during the six month period at Rs 53.94 crore was about 7 per cent lower.

The ITC Hotel stock however gained Rs 1.50 to close at Rs 46 on the Bombay Stock Exchange today.

A company release said, hotels and tourism industry in India had suffered a setback after the terrorist attacks in the US.


New Delhi, Oct. 19: 
Merrill Lynch, Goldman Sachs and Lazard Capital are among the six firms shortlisted for the mandate of global advisor to the Maruti Udyog selloff.

Disinvestment secretary Pradip Baijal said the Maruti divestment was on track and the global advisor would be chosen by the end of next week.

�We intend to announce a preferential rights issue by March. The first phase of divestment will be completed by the end of this year. The second phase will follow soon after,� Baijal said.

�We hope to complete the preferential issue by March to be followed by a public offering,� he said.

On Thursday, the ministry of heavy industries had announced the names of six contenders for appointment as valuers for MUL. Two international firms and one Indian firm will get that mandate.

The three Indian chartered accountancy firms in the fray are Bansi Mehta and Co, S.B. Billimoria and Co and C.C. Choksi and Co. KPMG, Ernst and Young, and Arthur Andersen are the international contenders.

Baijal said, �All the three valuers will be selected jointly by government and Suzuki Corporation.�

Baijal�s statement doesn�t square with the earlier expressed position that the government and Suzuki Motor Corp would choose one valuer each, while the third would be appointed by mutual consent.

Baijal said, �The people have now come to accept the divestment of companies. But there is always a doubt until approval for the final party is made. The valuation may not suit the government, there may be no parties to buy, or the stakeholders may cause a problem.�


New Delhi, Oct. 19: 
The government is hoping to reap a whirlwind in the farm sector�agriculture and allied products�where it is projecting a 7 per cent growth this fiscal.

Union minister for agriculture Ajit Singh said the target wasn�t over ambitious and he wasn�t fazed by the fact that the sector had grown by less than 1 per cent in the last two years.

Addressing the Economic Editors� Conference here today, the minister said growth in foodgrain production would be about 4 per cent this year.

Foodgrain includes cereals, oilseeds and sugarcane. The allied products of agriculture includes animal husbandry, dairying and poultry.

Singh said he had been emboldened to make the robust projections on the strength of a good monsoon, increased farm productivity and a raft of measures to achieve the desired growth, including diversification into other areas, the use of minimum support price as an incentive to farmers to grow more, and the draft seed policy.

Singh�s projections�if achieved�will hearken back to the glory days of 1998-99 when farm sector growth surged to 7.1 per cent. But it has slumped since�falling to 0.9 per cent in 2000-01, and 0.7 per cent in 1999-2000.

Singh said the overall kharif foodgrain production during 2001 as per first advance estimates is likely to be an all-time record at 105.6 million tonnes, which will be about 2.5 million tonnes more than last year�s 103.5 million tonnes. The highest-ever kharif grain output has been 104.8 million tonnes.

The minister said total export in the agricultural sector this year has crossed the $ 6 billion mark.

The minister said the government was attempting major reforms in the farm sector.


Mumbai, Oct. 19: 
The Securities and Exchange Board of India (Sebi) today reverted its decision on segment reporting.

Sebi made segment reporting mandatory for accounting periods commencing April 1 this year. Its accounting standards committee recommended that segment disclosures be made mandatory for quarterly accounting periods as well.

Yielding to �several representations� made by chambers of commerce and individual companies, Sebi said, it decided to make �segment reporting� voluntary for the quarter ended September 30.

While companies were apprehensive that disclosure of the detailed break-ups would put them at a competitive disadvantage, the market regulator and analysts say it is in keeping with international best practices.

Sebi�s decision today comes well after many companies have already disclosed break-ups of earnings, expenditure and capital employed on various streams of businesses and products.

The stock market regulator today said that the companies had asked for more time to make the necessary changes in their systems.

The segmental disclosure has been made mandatory by the Institute of Chartered Accountants of India (ICAI) as well.

Besides segment reporting, Indian accounting practices are being revamped in a number of other ways in keeping with internationally accepted accounting policies.

Among others, companies will have to take consolidate their accounts with that of their subsidiaries. Loss or profit registered by the subsidiaries will have to be absorbed to the extent of the shareholding.

For instance, if a company holds 60 per cent in its subsidiary, it will have to take on its own balancesheet 60 per cent of the loss or profit of the subsidiary.


New Delhi, Oct. 19: 
Bata and Khadim�s will soon face competition on their own turf.

Non-resident Indian Dipankar Purakayastha is setting up a Rs 235-crore leather footwear unit in Burdwan which he reckons will give the two shoe majors of Calcutta a run for their money.

The Foreign Investment Promotion Board has cleared Purakayastha�s proposal to set up a wholly owned subsidiary of his Cambridgeshire-based DPS Universal�the largest of the 33 proposals cleared by the board.

�This will be the second largest shoe company in India after Bata,� Purakayastha told The Telegraph.

�Now that the FDI proposal has been cleared, it will take 10-12 months for us to build the factory there. It will be a huge complex employing around 4,000-5,000 people. Besides catering to the domestic demand, we plan to export 25 per cent of our production to the UK,� said Purakayastha, who is the chairman of DPS Universal.

�I have experience in helping American shoe firms export their products to the UK. I am setting up my own retail shop in Britain. The investment there also amounts to Rs 237 crore. I want to help the Indian economy recover�so this is my little venture,� Purakayastha said.

Commerce and industry minister Murasoli Maran cleared proposals worth Rs 380 crore pertaining to engineering industry, software development, machine tools, electrical and electronics components, tourism, leather footwear and consultancy.

The other major proposal cleared today was made by Thomas Cook Overseas Ltd , the British travel and tour major, which intends to raise its stake in its Indian arm from 20 per cent to 60 per cent. This will entail an FDI inflow worth Rs 105.31 crore. Thomas Cook of the UK has already come out with an open offer to the public shareholders of the Indian subsidiary to increase its stake. Russian firm Iskraemeco has been granted permission to acquire 51 per cent stake in Seahorse Industries to manufacture electrical energy metres and plans to invest Rs 10.34 crore in this acquisition.

The government has also allowed French liquor major Pernod Ricard Group to manufacture and distribute alcoholic products as well as fruit-based products and fruit juices in association with Seagram India.

Korean eletronics major Samsung Electronics Co has been permitted to manufacture and market state-of-the-art colour monitors in India via its subsidiary Samsung Electronics India Information and Telecommunication Ltd.

B T (Netherlands) Holdings BV and General Mobile Co of UK have been allowed to offer cellular mobile telecom services, internet services, website communications and other value-added services in association with Bharti Cellular.


Oct. 19: 
Philips India has posted a net profit of Rs 8.7 crore for the quarter ended September 30 compared with a net loss of Rs 4.05 crore in the previous comparable quarter.

Total income fell to Rs 380.76 crore in the September quarter as against Rs 405.44 crore in the second quarter last fiscal.

Meanwhile, Philips has informed the Bombay Stock Exchange that S. Dasgupta has resigned from the board following his retirement from the company after 37 years of service, on October 2.

S. Venkatramani, senior vice-president, lighting, has been appointed to the board as executive director with effect from October 19, it added.

Aventis Pharma net up

Aventis Pharma Ltd has posted a 24 per cent rise in net profit to Rs 15.2 crore in the quarter ending September 30 compared with Rs 12.3 crore in the previous corresponding period.

Net sales rose by 6 per cent to Rs 152.3 crore. The total income increased to Rs 143.8 crore in the reporting quarter from Rs 133.2 crore in the corresponding previous quarter, Aventis informed the Bombay Stock Exchange here today.

The board has also approved merger of Rhone-Poulenc Rorer with the company. It holds 29,39,608 equity shares in Rhone Poulenc Rorer (India) Private Ltd which constitutes 49 per cent equity.

The company would now purchase the balance 30,60,417 equity shares in Rhone-Poulenc Rorer to make it a 100 per cent subsidiary of the company, subject to regulatory approvals.

Sun Pharma net rises

Sun Pharmaceuticals Industries Ltd (SPIL) has posted a 49.66 per cent increase in net profit at Rs 48.19 crore for the quarter ended September 30 compared with Rs 32.2 crore in the same period last fiscal.

The total income of the company during the period under review rose by 27.86 per cent to Rs 198.4 crore from Rs 155.16 crore last fiscal, the company informed Bombay Stock Exchange here today.

TVS-E in red

Chennai-based TVS Electronics (TVS-E), manufacturers of computer peripherals, has slipped into red in the quarter ended September 30, incurring a net loss of Rs 0.93 crore as against a profit of Rs 1.03 crore posted during the same quarter last year.

The total sales of the company was down 22.43 per cent to Rs 45.37 crore during the quarter compared with the previous consecutive period, according to TVS-E.

Director Gopal Srinivasan attributed the fall in sales and incur of loss to the severe drop in demand from corporate as well as government buyers.

The company shifted its focus to exports to combat the drop in domestic demand and the export revenues surged by 32 per cent during this period.

Sonata net down 30%

Sonata Software Ltd�s (SSL) net profit dipped by 29.67 per cent to Rs 6.18 crore in the second quarter ended September 30 compared with Rs 8.79 crore in the corresponding period last fiscal.

Total income was down to Rs 23.87 crore in the reporting quarter from Rs 33.21 crore last year, it said.

The company board has declared an interim dividend of 20 paise per share, SSL informed the Bombay Stock Exchange here today.

SmithKline Q3 net dips

Fast moving consumer goods major SmithKline Beecham Consumer Healthcare today announced a 6.6 per cent drop in net profit for the third quarter ended September 30 at Rs 28.25 crore compared with Rs 30.23 crore in the same period last year.

Net sales, however, increased by 10.5 per cent at Rs 232.1 crore during July-September against Rs 209.9 crore in the year-ago period, the company informed Bombay Stock Exchange.


Calcutta, Oct. 19: 
The IBP disinvestment process has suffered a setback, with all 12 prospective bidders seeking clarifications on the proposed oil sector watchdog which will replace the Oil Co-ordination Committee (OCC) following deregulation in April 2002.

Confirming the development, a member of the Inter Ministerial Group (IMG) said all companies interested in acquiring the government�s stake in the Calcutta-based oil marketing company have made it clear they would participate in the bidding only after the petroleum regulatory Bill is passed by Parliament.

�The bidders want to know what exactly would be terms of reference for the regulator in the post-APM (administered price mechanism) scenario. Nobody wants to invest in uncertain circumstances,� the member said.

However, he said the government plans to table the Oil Sector Regulation Act in the Winter Session of the Parliament. �The price bids can be called only after enactment of the Act,� he added.

The IMG, which will meet in the first week of November to review the situation, will also initiate the process of vetting the share purchase agreement. The date of the meeting however is yet to be finalised, he added.

The member noted the government is keen to complete the disinvestment process in IBP by the end of January.

The government has also agreed �in-principle� to waive the bank guarantee clause from the draft shareholders� agreement in order to attract bidders.

Under the agreement, the prospective partner has to provide a bank guarantee to the tune of Rs 500 crore. Moreover, the new promoter will have to invest Rs 2,000 crore by the year 2010. The member said both clauses have come in for stiff opposition from the bidders, as they fear these will affect competitiveness.

The source, however, said the government will not drop the mandatory investment clause from the draft agreement. The issue is likely to come up for discussion at the next meeting of the Cabinet Committee on Disinvestment to be held on October 23, he said.

Shell, Reliance, IOC, HPCL, Essar, BP-Amoco are among those in the race for a 33 per cent stake in the oil marketing company which has over 1500 outlets across the country.



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