Suzuki may pay special premium for full Maruti control
Global Trust, UTI Bank on IDBI merger roster
Mahajan vows tax sops for telecom
Crisil lowers rating of Tata Finance debt paper
ADRs to follow Bharti local float
Dhunseri group firm set to tap market
Govt hints at tax regime overhaul
Maran uses WEF dais to blast world trade body
Strong brew for heady growth in tea exports
Foreign Exchange, Bullion, Stock Indices

New Delhi, Dec. 4: 
Suzuki Motor Company has finalised the roadmap for buying out the Indian government�s stake in Maruti Udyog Ltd. The Japanese car major is expected to hold talks with finance and disinvestment ministry officials on the issue later.

Top disinvestment ministry officials said a rights issue would be made to which Suzuki would subscribe while the government would not.

Suzuki is likely to pick up the entire rights issue, paying both the rights premium and a separate premium for gaining management control.

At present, the Japanese car company has a 50 per cent stake in Maruti and any increase in equity stake would automatically give them full management control, something which they now share with the Indian government.

The rights issue price and premium will be worked out by the merchant bankers while the premium for control is likely to be 25 per cent of the value of these shares.

The Indian government has insisted and managed to convince Suzuki that it has to pay both these premiums, disinvestment ministry officials said. Suzuki officials have also agreed to float a public issue within six months of the rights issue, so that Maruti turns into a listed company.

The government can then sell its remaining stake in MUL at the market price, officials said. The decision to sell government�s holding in Maruti, valued by some analysts to be worth about Rs 4,000 crore, was taken last year after the car market started slipping into a recessionary mode and new players started eating up Maruti�s earlier unchallenged market share of over 70 per cent.

The entire process was earlier stalled as Suzuki had not agreed to the Indian government�s proposals, but sources said the entire issue has once again picked up momentum and would be implemented with some modifications.

Though the process may take some time, the government has already picked Kotak Mahindra as the global advisor for divestment in Maruti Udyog. Kotak Mahindra was among the six merchant bankers, including Merrill Lynch and Lazard Capital, who were in the fray to bag the advisor�s job.

The government is, however, still to appoint one domestic and two international accountancy firms as valuers for Maruti Udyog. The divestment department had earlier shortlisted S.B. Billimoria, C.C. Choksi and Bansi Mehta and Co for appointment as domestic valuers. The foreign players shortlisted are Ernst and Young, Arthur Andersen and KPMG.


Calcutta, Dec. 4: 
Industrial Development Bank of India (IDBI) is weighing options for a three-way merger with UTI Bank and Global Trust Bank as an alternative approach to realise its universal banking goal.

Sources say the move is in the nature of a Plan B for the financial institution, whose overtures for a link-up with public sector banks have met with a lukewarm response.

Four state-owned banks � Bank of Baroda, Union Bank, Canara Bank and Punjab National Bank � have been sounded on the proposal at an informal level, but none have warmed up to the idea so far. Opening another flank on the path to universal banking, IDBI wants to ensure that it has merger-worthy partners if PSU banks cannot be convinced about the merits of a marriage.

Sources say IDBI may be amalgamated with IDBI Bank through a reverse merger, and the combined entity could, in turn, fold up into one or more banks. Asked whether merger discussions between IDBI and private sector banks have taken place, sources said �some informal talks� have been held. Official confirmation from IDBI, GTB and UTI Bank about the parleys could not be obtained despite several attempts by The Telegraph. A merger between IDBI and the two private sector banks would give the new entity over 200 branches, mostly in big cities.

Although talks have been opened with all prospective partners, sources say UTI Bank is emerging as the preferred candidate. IDBI owns much of Unit Trust of India, UTI Bank�s parent, and has a strong voice in its management through its executive trustee and four ordinary trustees.

�IDBI chipped in with 50 per cent of US-64�s initial capital 37 years back. Last year too, it invested Rs 250 crore,� sources said.

The financial institution has set up an internal committee to look into all parts of the roadmap that has been drawn up to enter universal banking. It has asked the government to set a deadline for its transition from a term-lending institution to a full-fledged bank.

Flagging fortunes in the past few years have forced the financial institution to approach the government for amendments in the IDBI Act, 1963. �The matter, now with the government and the RBI, should be cleared soon. Only when the legal framework is in place can we make formal proposals to banks we would like to merge with,� the official said.


New Delhi, Dec. 4: 
Communications minister Pramod Mahajan today promised to push hard to secure major tax incentives for the telecom sector this time, just as he has done for the information technology sector over the past two years.

�We will try and replicate in the telecom sector the success we had in rationalising the tax structure for the IT industry in the last two Union budgets,� Mahajan said.

He said he would approach the finance minister with a proposal to rationalise the tax structure for the telecom sector.

Further, the minister said the finance and other ministries had consented to the import of second-hand computers, which will be supplied free of duty to schools. The scheme to supply used computers to schools has been hanging fire for some time and could not take off due to various inter-ministerial wrangles.

�The Software Technology Parks of India has been identified as the nodal agency that will receive used computers, from where the schools will receive them. This will solve the problem of paying duty. The finance ministry has no objections to the procedure and a way will soon be devised to provide these computers to schools, � said Mahajan.

Speaking at a seminar organised by the World Economic Forum here today, Mahajan said the government was open to any practical idea floated by private operators to improve the existing system to help enhance telecom penetration in the country. He pointed out that his ministry�s target was to provide 100 million telephones by 2004. �Naturally it will be a miracle, but miracles do happen if the right initiatives are taken,� said Mahajan.

The controversy on issues like interconnection, which has been a major hurdle for the rollout of private telecom services, is also likely to be solved soon.

Mahajan also directed Bharat Sanchar Nigam Ltd (BSNL) to offer interconnectivity tariffs suggested by private telecom operators. However, the agreement will have a clause that will stipulate that both parties will have to agree to the terms and conditions as and when the Telecom Regulatory Authority of India (Trai) comes out with its decision on the controversial issue of interconnection.

Earlier, Mahajan urged all Asian countries to come together to harness the potential of IT in the region.

Software exports

Nasscom today said software exports in the third quarter (Oct-Dec) are likely to post little more than a flat growth, adds PTI.

�Third quarter results looks better with as much information available now. Software exports will post a little more than the flat growth that we had predicted last quarter,� Nasscom chairman Phiroz Vandrevala said on the sidelines of the India Economic Summit here.

The optimism is significant in view of the earlier projections by Nasscom which stated that revenues in the third quarter are likely to be pegged at up to Rs 9400 crore.

Software export revenues in the second quarter, however, clocked Rs 8,900 crore.


Mumbai, Dec. 4: 
Tata Finance Ltd, the beleaguered non-banking financial corporation from the Tata stable took a blow on its chin, when premier credit rating agency Crisil downgraded its entire portfolio of debt paper.

The downgrade coincides with the company unravelling more murky deals committed by the former management. The ratings assigned to the non-convertible issues of TFL have been downgraded to BBB from A-.

The downgrade comes at a time when the company has been directed by the Securities and Exchange Board of India (Sebi) to offer an exit option for the rights issue of 90 lakh shares of Rs 100, aggregating Rs 90.93 crore, which opened for subscription on March 30, 2001. The Tatas, in a notice, said the board of directors have subsequently come to know of certain transactions in relation to the operations and functioning of TFL, which were not correctly stated in the offer letter dated March 20, 2001, for the above issue.


New Delhi, Dec. 4: 
Bharti Televentures plans to raise funds through an American Depository Receipt (ADR) issue after its Initial Public Offering (IPO) next year.

Bharti group chairman Sunil Mittal said that besides bringing in the funds, the IPO and the ADR issue will enhance the company�s image both in the country and abroad.

�We will go out and list our scrip on overseas bourses. We are already following the International Accounting Standards (IAS) in addition to the US Generally Accepted Accounting Practices (GAAP). Further, our offer document submitted to the Securities Exchange Board of India (Sebi) last month meets all the guidelines used by international agencies to evaluate a company,� said Mittal.

Bharti Televentures plans to offer a 60 per cent stake to institutional investors, 25 per cent to non institutional investors and 15 per cent to retail investors, when it comes out with its IPO.

Mittal�s target is to launch Bharti�s new cellular, fixed line and national long distance services before the end of the current financial year, barring the Mumbai circle where it plans to launch its services in April. But, when the Mumbai operations are launched, the company wants to be the first service provider to offer general packet radio service (GPRS) � a technology that allows high-speed data transmission over a mobile network.

He said the undersea cable project from Singapore to Chennai was likely to start commercial operations next March. The cable will be connected next fortnight and tests will be completed by the end of February.

Bharti Televentures has already decided to invest Rs 5,200 crore in new projects and to pay for the acquisition of various telecom companies. The company also plans to raise its debt-equity ratio to 1:1 from the current level of 0.36:1. It has an equity capital of about Rs 4,000 crore largely funded by financial investors, the rest being debt.

�We understand we have a long way to go but we will strive to reach the goal as quickly as possible,� said Mittal.

Early this year, the company had announced its plans to provide mobile services across the country.


Calcutta, Dec. 4: 
South Asian Petrochem Ltd (ASPET), promoted by the Dhunseri Tea group, is making a cautious entry into the capital market with an initial public offering of equity shares and fully convertible debentures aggregating Rs 74.5 crore.

The issue will comprise 69.50 lakh fully-convertible debentures of Rs 100 each carrying a lucrative 14 per cent interest and five lakh equity shares worth Rs 5 crore. The issue will open on December 20.

The company is implementing a Rs 450-crore export-oriented pet resin project at Haldia. With a production capacity of 1,40,000 tonnes per annum, the bottle grade pet resin ASPET unit is scheduled to go on stream in July 2003.

ASPET has already entered into a pact with its engineering, procurement and construction (EPC) contractor Zimmer AG and Lurgi. A sale agreement for 73 per cent of production has also been reached with Helm AG and Polytrade of Germany.


New Delhi, Dec. 4: 
The Centre is working towards a better tax regime and is considering certain changes to the Minimum Alternate Tax (MAT) system, for which it has already set up a committee.

Speaking to reporters on the sidelines of the India Economic Summit here, revenue secretary S. Narayan said the government is working towards revamping the tax regime and the brainstorming on the Partho Shome committee�s recommendations on the tax system has already started. �A lot of good work on the tax front is being done. Income tax implementation issues have already been taken up and meetings have been held with the chief commissioners of income tax to look into procedural delays. Besides this, we have already formed committees to look into the issue of MAT and exemptions to be granted to charitable trusts,� Narayan said.

Regarding the tax mop-up, Narayan said the expansion of the 1-by-6 scheme will boost collections. Customs collections, he added, were down by 13-14 per cent till October on account of a reduction in duties on crude and fall in crude prices.

Indo-US trade

Meanwhile, Richard Haass, director, policy planning, US Department of State, said Indo-US bilateral trade is likely to see a slowdown this fiscal due to the global economic slowdown and other impediments to the growth of the Indian economy.

Speaking to The Telegraph on the sidelines of the India Economic Summit, Haass said the slowdown is not only due to the World Trade Center attacks. �There are larger forces than September 11, affecting the economy,� he said.


New Delhi, Dec. 4: 
Launching a frontal attack on the World Trade Organisation (WTO) for lack of transparency, India today called for serious introspection about the �fairness� of the preparatory process for ministerial conference.

�I would strongly suggest that WTO members should have serious introspection about the fairness,� commerce minister Murasoli Maran today said at the India Economic summit. He asserted that no new text on any issue should be thrust on ministerial conferences without giving sufficient time for studying and consulting.

Maran made this remark in the context of the manner in which the developing countries were bulldozed into accepting a new draft declaration in the last minute at the Doha ministerial.

On the controversial issue of labour standards, the minister said we should not give away our competitive advantage.

Maran, who was sharing the dais with French foreign trade Francois Huwart said the very interest of foreign countries often stem from the availability of labour at cheaper rates. Our competitive advantages should not be taken away from us, he said.

Huwart said Doha was not the end but the starting point of negotiations.

Meanwhile, the three-day summit ended today with a call to the industry to perform and to the government to put its act together.

World Economic Forum (WEF) director Collette Mathur said the summit has been a grand success because of the active participation of the government.


Calcutta, Dec. 4: 
International consultant Accenture will present a mid-term export strategy for tea before Union commerce minister Murasoli Maran and representatives of the tea industry in New Delhi on Wednesday.

Accenture, which had been appointed by the Tea Board to work out a mid-term export strategy, has set an ambitious export target of 284 million kgs by 2006, which, it says, can be achieved by producing more orthodox teas.

The Accenture report says Indian tea exporters should target markets like Chile, Iraq, Pakistan, UAE and Iran.

The consultant also asked producers to check rising costs and suggested that they devise means to immediately increase the productivity of their gardens for survival.

Gautam Bhalla, chairman of the export sub-committee of the Consultative Committee of Plantation Associations, said, �Orthodox tea production has to be increased substantially over this year�s level. This would perhaps rectify the over-supply position of CTC tea in the market and enhance the competitive edge of Indian tea in the domestic as well as the international market.�

Under the World Trade Organisation (WTO) regime, India, being primarily a CTC producer, will be subject to severe competition from other CTC tea producing countries who can offer their products at lower prices. �Prospects would, therefore, lie in the orthodox tea segment where India has traditional strength,� Bhalla added. Moreover, CTC is consumed only by four countries � India, Pakistan, UK and Egypt.

The CCPA has targeted an additional production of 20 million kgs of orthodox tea for north India in 2002 and south India is proceeding on similar lines.

To help producers increase production of orthodox teas, the Tea Board has approved a 25 per cent capital subsidy for the purchase and installation of orthodox machinery for implementation in the Tenth Plan period. This is awaiting clearance from the Union commerce ministry.

Accenture, in its report, has set four different export targets � 235 million kgs, 242 million kgs, 255 million kgs and a maximum of 284 million kgs � by 2006, based on certain parameters.

Senior tea industry officials said that an export target of 235 million kgs is a must for the Indian tea industry. �We expect to achieve an export figure of 250 million kgs by 2006,� the said.

The industry aims to export 215 million kgs of tea in the current financial year. However, exports till September were down by 15 million kgs as against last year, mainly due to lower offtake by Russia.

As far as labour productivity is concerned, industry has already initiated steps to increase output in the gardens. The Darjeeling tea industry has entered into an agreement with its workers to increase plucking by 10 per cent. �This will happen in Assam, Dooars and south India also,� industry officials said.



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