Maruti, Jessop selloff in last lap
Bajaj Auto third quarter net zooms 280%
Hyundai to jack up prices soon
After Indica, it’s Tata sedan
Surf the Net with BPL handsets
Reddy prefers corporate garb for PSU banks
Ford spins Potter magic at car carnival
Kinetic Motor lines up slew of launches
Debt tribunal blow to UTI arm
Foreign Exchange, Bullion, Stock Indices

New Delhi, Jan. 16: 
The valuation exercise for Maruti Udyog Ltd has been completed and the government will soon resume negotiations with Japan’s Suzuki Motor Company to divest its stake in the country’s largest automaker. Disinvestment minister Arun Shourie did not spell out the valuation which is a crucial factor in determining how much of the government’s stake will be sold in the first stage.

Last year, the CCD had cleared a proposal to dilute the government’s 49.5 per cent stake in MUL through a Rs 400-crore rights issue.

The valuation will determine the number of shares that the government will divest through the flotation and the premium that the government intends to charge for its holding.

The shares were first offered to the financial institutions who have baulked at the idea of taking on an equity exposure to Maruti Udyog which had reported a Rs 300 crore loss in the fiscal ended March 31, 2001. The company’s performance has improved since then and it is expected to return to the black this year but the FIs have been wary of the carmaker because of the tight prudential investment norms set by the Reserve Bank of India.

The government had given the mandate for the Maruti Udyog valuation exercise to KPMG, Ernst and Young, and S.B. Billimoria.

Talking to reporters after the meeting of the Cabinet Committee of Disinvestment, Shourie said the government had finalised restructuring plans to speed up the the privatisation of loss-making companies Paradeep Phospates Limited (PPL) and Calcutta-based Jessop.

Shourie said that that financial and technical bids would be invited within four to five days to divest a 74 per cent stake in Paradeep Phosphates and 72 per cent in Jessop.

The CCD also approved the share purchase and shareholders’ agreement for Paradeep Phospates, the disinvestment minister said.

In, Paradeep Phosphates Limited (PPL), the committee has approved the conversion of outstanding of preference share capital of 117.65 crore into equity of the company, effective from March 2001. It has also decided to convert Rs 85 crore of outstanding government’s loan into equity share capital of PPL with effect from March 2001.

On an authorised capital of Rs 467.65 crore, accumulated losses of PPL has been put at Rs 431 crore as on March 2001. Shourie added that PPL was making a loss of Rs 10-15 crore every month and its networth was negative at Rs 84 crore. Jessop’s losses stood at Rs 49 crore on March 31, 2001.

Selloff parameters

Shourie said a five-point strategy has been drawn up for selloff in non-strategic public sector undertakings that have not been referred to the revamped Disinvestment Commission.

The first criterion states that the disinvestment in a PSU should give large revenues to the government. The second is that it should have minimum impediments, and the process should be achievable in a short span of time.

The third is to take into account “companies that that are bleeding in terms of mounting losses with the passage of time and those which needs to be addressed swiftly,” said Shourie.

The last criterion will be the prospects and the performance of the PSUs. Shares given to employees should be related to the performance of PSUs, said Shourie.


Mumbai, Jan. 16: 
Bajaj Auto Ltd today beat street expectations when it posted a whopping 280 per cent rise in net profit for the third quarter of the current financial year.

The Pune-based two-wheeler major’s net profit went up to Rs 108 crore from Rs 28.48 crore in the year-ago period.

Sales for the quarter under review was up by more than 25 per cent to Rs 1,125 crore from Rs 899 crore in the last financial year.

Majority of analysts tracking Bajaj Auto Ltd’s counter at the Bombay Stock Exchange said the results are better than expectations.

However, the Bajaj scrip, which recently pierced the Rs 400-mark, ended the day with a deficit of 1.2 per cent at Rs 423.45.

Bajaj Auto achieved the exceptional results for the third quarter on the back of drastic cost cutting that saw the company’s operating profit margins increase from the previous quarter’s 13.5 per cent to 14.05 per cent.

The corresponding previous quarter saw the company expending Rs 26.50 crore as against Rs 2.47 crore during the quarter under review.

Bajaj, which has a sizeable portfolio of investments, saw its market value of investments as of December 31 swelling to Rs 1,862 crore from Rs 1,479 crore as of March 31, 2001.

In the other income category, the company has included Rs 117 crore as non-recurring revenue for the first nine months which the company has received as a premium from its overseas partner for foraying into the insurance venture.


New Delhi, Jan. 16: 
Hyundai Motor India Limited today formally announced its intention to raise prices of its models by 2-3 per cent some time later this month.

“It is a natural increase of price and does not have anything out of common,” said B.V.R. Subbu, director marketing and sales of HMIL.

Hyundai is sticking to its earlier stated intentions even as others are reportedly having second thoughts about a price hike that could jeopardise an incipient recovery in car demand.

Hyundai is planning to introduce a sports utility vehicle (SUV) called the Terracan which will be offered in a price range of Rs 18-22 lakh depending on its line of production. The model is tentatively scheduled for a March launch.

”If I am able to offer a SUV in this range then why will people buy cars? The idea is to make the pricing within this range. The customers response is good, so we will probably be bringing in SKD or CKD kits and assemble in India. This will enable us to stay within the price range. If we bring it in through the CBU route, it will cost us around Rs 25 lakh,” Subbu said.

”People are comparing the model to Ford Escape, Camry, Prado and Pajero the other SUVs that are to be launched this year. Other than quality, we hope to win on price,” he said.

Terracan has won more customer plaudits than the Santa Fe, the SUV that is on display at the Hyundai stall. The company has yet to decide on the launch of the Elantra which is being boxed between the Sonata and Accent.

”We are still not sure about how to position this model so we are keeping the plans on hold. If a handful of customer fancy it, we will have to go in for the CBU route which again will make it as costly as Sonata and that will never translate into volumes,” said Subbu.


New Delhi, Jan. 16: 
A little over two years ago, the Tatas launched the Indica—the Indian challenge to a formidable line-up of foreign-made small cars and sub-compacts that had swept aside the lumbering Ambassador and the peppy Padmini.

Today, Tata Engineering (Telco) unveiled its plans to take the desi competition some way up the ladder to target the Maruti Esteem, Opel Corsa and the Ford Ikon with its 1405 cc Tata sedan in petrol and diesel versions to be launched in September.

Telco has had a great year in 2001 when it outsold Hyundai’s Santro to take pole position in the sub-compact segment in the months of September and October. It fell behind the Santro in November in a gripping twist to one of the hottest auto stories. Telco is hoping to bring the same energy into the mid-sized car segment.

“It is our show against the world. We have proved that we can also make a mid-size passenger car completely in-house. The name of Telco brings hope and faith and we hope to live up to it with this launch,” said a very emotional Ratan Tata after unveiling the new model that is being developed on the Indica platform and will be priced in the Rs 5-7 lakh range.

The Tata sedan has new suspensors, a different wheelbase and a boot.

“No one can enter the car market with a single model and hope to survive for long. So after the Indica hatchback, we were planning for this sedan. There are further plans to bring about an estate version and van from the same platform,” said Tata.

The diesel version of sedan at present is powered by a 60 bhp, 1.4-litre, high torque engine while the petrol one has a 85 bhp output. There are plans to fit the car with a turbo diesel engine at a later stage.

“The car will be ready for commercial production only in September. Although it has not been priced yet, the price tag between C segment cars varies between Rs 5-7 lakh and we will also stick to that. We are aiming to achieve a 15 per cent market share in the C category and aim to sell 1500 to 2000 cars a month,” Rajiv Dube, general manager in charge of the passenger car business.

Telco has already invested Rs 370 crore on the development of the Estate and the sedan. The automaker said it had achieved a cash break-even from July.

“With the economy doing badly, as the second largest car maker in the country, we have taken the greatest hit. But commercial vehicles will turn around the moment the economy turns around. We are not being foolhardy but are displaying our boldness by investing in the car business in the present scenario,” said Tata.


Mumbai, Jan. 16: 
The competition in the cellular phone market is hotting up with service providers bending backwards to retain clientele.

BPL Mobile today served the latest salvo in Mumbai by launching ‘General Packet Radio Service’(GPRS) technology that enables the subscriber to access internet through their handsets.

GPRS would allow a subscriber to browse the web, chat and download your favourite music by using the mobile phone.

BPL Mobile proudly touted the new facility as “walking with an internet connection in your pocket and get online whenever you feel like it. ”You can now connect to the internet 24 hours a day by just plugging your mobile phone to your home PC, laptop or Pocket PC/PDA”.

With this, BPL Mobile became the first network to provide such a service in India and beat other players in the industry like Bharti and Orange who were contemplating a similar launch.


Calcutta, Jan. 16: 
Reserve Bank of India (RBI) deputy governor Y. V. Reddy has floated the idea of converting banks into companies to facilitate changes in ownership, mergers and acquisitions, besides ensuring sound corporate governance and employee motivation.

Delivering the valedictory lecture at the Bank Economists’ Conference (Becon) here today, he called for a uniform piece of legislation for the industry. “There are several laws. For example, State Bank of India has a separate Act. Its subsidiaries are regulated under a different legislation. There should be a single law for the banking industry, similar to the Companies Act. This does not mean privatisation, though.”

One of the ways of doing that would be to form a holding company, which shall serve as the repository of shares held by government and Reserve Bank of India.

The holding company will carry out three main functions: ensure fiscal neutrality, protect the interests of banks that are serving special public purpose by infusing resources and enhancing bank-wise, genuine board management and worker motivation.

“The critical part will be to run the holding company, which will help the government devote attention to a specific task instead of focusing on a variety of assignments performed by myriad institutions,” Reddy said.

Bank officials feel the idea, coming from an RBI top-gun, might turn into reality, even though Reddy himself insisted that it was only a long-term vision. “A vision is not necessarily feasible, but hopefully possible.”

To ensure genuine corporate governance and protect private shareholders in banks — even if the state owns a majority — a public sector entity should be one where 100 per cent of the ownership is directly vested with the government, and not 51 per cent or above.

Reddy said central vigilance should cover public servants, but persons employed in organisations which compete with private sector companies should be governed by laws that are binding on firms outside state control.


New Delhi, Jan. 16: 
What’s Harry Potter doing in a car show? Teaching children about environment and safety, automaker Ford would say, which has roped in the boy wizard with a lightning-bolt scar on his forehead to weave a spell on the li’l ‘uns.

So the ‘Hogwarts school of magic and witchcraft’ turns into the ‘Fordwarts school of magic and witchcraft.’ And who to play the wizard better than Ford India managing director and president David E. Freidman himself. Besides being a big draw with the children, this wizard also does a soft sales pitch for cars from the Ford stable.

The Hogwarts Express—the passenger train that runs between Kings Cross station in London and Hogsmeade Station near the village of Hogwarts at least four times a year—the village itself, and other characters from the series, all come alive at ‘Ford Junior Funtasia’. The original train has no adults on board—except a witch who pushes a tea cart through the train and the driver. The Ford version too is meant primarily for little feet.

What’s more, every kid who visits the show gets a load of freebies. The only condition is that they board the train, get down at platform 9 ¾, and enter the Hogwarts village.

Inside, characters from the novel interact with the students, informing them about issues related to safety and environment.

“We have the quiz programme which is a big hit. The teen wizard asks questions ranging from environment, science fiction, road safety, technology and on Harry Potter himself. The whole idea is to make the event more meaningful to children who visit the fair,” he said.

“The concept was conceived to keep the ‘Josh’ concept alive. The take-off from Harry Potter to communicate with children was natural since it is what today’s kids read,” he added.

And while the kids try to crack the Harry Potter trivia, clowns and characters from the novel move around the Funtasia stage, throwing snow at the participants. Adding to the aura of mystery are cut-outs of the train, shops selling quaint, magical ingredients, and goblins and wizards.

Ford plans to organise more such events during the year. “We are evaluating this show and more events are being planned,” a company spokesperson said. “We will observe January 20 as the Ford environment day. We plan to involve children from 20 schools in Delhi to spread awareness on environment conservation,” the spokesperson added.


New Delhi, Jan. 16: 
Two-wheeler maker Kinetic Motor today unveiled a limited edition 100 cc scooter ‘DC edition Kinetic’ designed by automobile designer Dilip Chabbria. “Only 2,500 units of the scooter will be sold as a limited edition through select Kinetic outlets. The DC edition Kinetic will be competitively priced and hit the road in May,” Kinetic Motor chairman Arun Firodia said at the ongoing Auto Expo here. The scooter would deliver a mileage of 50 kms per litre and had been customised by Dilip Chabbria’s Design Studio, he said.

Kinetic will roll out a 150cc motorcycle GF 150 in March followed by the launch of 100cc motorcycle Boss in the near future. The Pune-based company will also soon launch the scooter Nova in March, as part of its strategy to become the largest player in the auto-geared scooter segment.

Scooters India plan

Government-owned Scooters India Ltd (SIL) is working on the prototype of India’s first fuel-cell three wheeler which is expected to be commercially launched by 2003. SIL is also gearing up to introduce three new models in its three-wheelers category.

As part of its cost cutting exercise, the company will implement a fresh voluntary retirement scheme to trim over 250 people in April. SIL chairman and managing director A. Sahay said that with the government failing to attract any buyer for SIL, the state-owned three-wheeler maker has now decided to tighten its belt and shed flab.

Clutch Auto move

The promoters of auto component manufacturer Clutch Auto Ltd are planning to increase their stake by 2 to 3 per cent through the creeping acquisition route in a bid to gain majority holding in the company. “We are planning to raise our stake from the present level of 50 per cent by 2-3 per cent through the creeping acquisition route,” said Vijay Mehta, vice-chairman and managing director, Clutch Auto. Public holding in the company having paid up equity of Rs 8.81 crore is 50 per cent. The company is listed on the Bombay Stock Exchange and the scrip price is currently moving in the range of Rs 5-7.70.


Calcutta, Jan. 16: 
The Debt Recovery Tribunal (DRT) has ordered attachment of the properties of Unit Trust of India’s subsidiary Stock Holding Corporation of India Ltd (SHCIL)—the country’s largest depository participant. The order was passed in response to a claim of Rs 26 crore filed by IndusInd Bank.

SHCIL said today that it was consulting its lawyers, and would soon file an appeal with the “appropriate forum”. The dispute arose from the sale of DSQ Industries shares by Harish Chandra Biyani—a Calcutta-based broker—through his broking firm Biyani Securities under the Sell-n-Cash scheme of SHCIL. Both Biyani and his firm subsequently defaulted on the Calcutta Stock Exchange (CSE).

Under the Sell-n-Cash scheme small investors who held depository accounts with SCHIL could receive instant cash for shares they sold through SHCIL-empanelled brokers. Biyani sold the infrequently traded DSQ Industries stock to entities that subsequently defaulted.

The total value of the securities sold by Biyani was a little over Rs 24.40 crore.

SHCIL issued three forward-dated cheques to Biyani for the value of shares sold, which he discounted at IndusInd. But subsequently, CSE expunged the trade alleging that the trade was collusive in nature. SHCIL, having not received the money from the defaulting buyers, refused to honour the cheques it had already issued to Biyani, though by then, IndusInd had discounted them and paid Biyani.

Through a letter addressed to IndusInd dated March 2, 2001, SHCIL had said: “We irrevocably undertake that the (three) cheques will be honoured on presentation on the date mentioned (March 14).” SHCIL had also confirmed that it would not “stop payment of the cheques”.

The attached properties of SHCIL include its 5-acre plot at Vashi, Navi Mumbai, and its investments in various state government bonds and mutual funds, among others. Before moving the DRT, IndusInd issued a notice to SHCIL under section 138 of the Negotiable Instruments Act for recovery. This was challenged by SHCIL, but its validity was upheld by the Supreme Court.



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