New spokes turn the Tata wheel
Bharti fined for flawed legal stand
British Gas, Reliance join Dabhol race
Russia to settle claims of exporters
Indo Rama to tap overseas funds
SAB uncorks Castle Lager
Indica zips on Telco�s flat sales path
Volvo sedan to hit roads soon
ILD bug bites Caltiger, search for ally to begin
Foreign Exchange, Bullion, Stock Indices

Mumbai, Feb. 7: 
The Tata group, long identified with quotidian items like steel, salt and tea, is changing � from being a 124-year-old leviathan into a technology-driven powerhouse. At the heart of that makeover is a high-stakes incursion into the new economy.

Ironically, it is the old warhorses, like Tata Power and Tata Steel, along with holding company Tata Sons, that are spearheading the Rs 41, 300-crore giant into uncharted waters.

The buyout of VSNL has added Rs 7,966 crore to the topline � which is almost 15 per cent of the group turnover � and changed the way it makes money. The acquisition will help the Tatas expand their fledgling communication and information businesses to a level where their contribution to the turnover will be the same as traditional interests of materials (steel) and engineering.

At present, steel accounts for 24 per cent of the turnover, engineering (Telco) 29 per cent, chemicals 10 per cent and consumer products 7 per cent; services and communications contribute 11 per cent and 10 per cent respectively.

The group has lined up massive investments in new-economy ventures, but has hardly set aside anything for its steel business, except for a planned titanium project.

In Panatone Finvest, the special purpose vehicle created to acquire VSNL, Tata Power and Tata Sons will be the main shareholders; Tisco will be a marginal investor.

Money made from the communications and information systems businesses will more than double after the acquisition of VSNL. The growth will be fuelled by the launch of broad-band and basic services.

Energy is another area in which the group sees a lot of promise, and has major investments lined up for it. Among them is the planned bid for Enron�s controlling stake in Dabhol Power project in Maharashtra.

Consumer products are turning out as a good bet too: Tetley�s acquisition � and its ongoing integration � will raise the proportion Tata Tea contributes to the group turnover over the next few years. Services, embodied by Indian Hotels (Taj Group), are also expected to set the cash registers at Bombay House ringing.

In the past couple of years, the group has embraced sweeping restructuring plans that included discarding companies like cement major ACC and Forbes Gokak, the textile outfit that did not fit into the new scheme of things.

It has not passed up an opportunity to add to its sprawl of 80 diversified companies either, using them to pursue new business opportunities spawned by developments in technology. The acquisitions of government-owned CMC and VSNL have opened new business frontiers.

The Tatas were also close to acquiring Air-India, the country�s international carrier, but could not pull it off because Singapore Airlines, their partner in the bid, pulled out.

Group chairman Ratan Tata explained to his employees the rationale for retaining or divesting companies in a letter written to employees last month. �We will now need to critically evaluate individual company performances to determine which companies will be retained, funded and expanded as part of our core businesses in future.�


New Delhi, Feb. 7: 
The Telecom Dispute Settlement and Appellate Tribunal (TDSAT) today pulled up Bharti Telenet for misquoting the Attorney General�s opinion to gain advantage in the payment of licence fee dues and imposed a fine of Rs 10,000 on the company.

Bharti Telenet had, in its application, sought an extension of the licence fee period by six months for basic fixed line telecom services in Madhya Pradesh.

�According to the facts of the case, the petitioner (Bharti Telenet) must pay costs to the respondents (Union of India). The costs, assessed at Rs 10,000 must be paid within four weeks� time,� the tribunal said in its judgement while dismissing the petition.

�The counsel for the petitioner has very irresponsibly argued that the Attorney General�s opinion lends support to his case and the government, due to malafide reasons, has disregarded this opinion,� the TDSAT observed.

�This sort of misleading representations should not come from the bar and an appropriate order has to be passed to deter anybody from trying to mislead the court by making reckless allegations,� it added.

The tribunal added that Bharti Telenet�s application was without merit and �is hereby dismissed.� Bharti had argued that the government obtained the opinion of the Attorney General, which was in favour of the petitioner.

TDSAT noted that as per the order, Bharti had enjoyed an extension of seven months of the effective date of its licence (from February 28 to September 9, 1997) and the question of any further extension of the effective date of its licence cannot arise.

�The extended period gave Bharti a much longer time frame to fulfil its obligations relating to commencement of services and roll out; and it has thereby obtained a headstart on the other licence holders,� TDSAT said.

Meanwhile, a Bharti spokesperson said: �There is no question of incorrect representation. We are waiting for the final order based on which we will take appropriate action.�


Mumbai, Feb. 7: 
In a fresh twist to the Dabhol saga, Reliance Industries Ltd (RIL) today entered the race for Dabhol Power Company (DPC) in its dying stages, taking the total number of contenders to eight. Apart from Reliance, the other new bidder was British Gas plc.

Though institutional sources confirmed that Reliance had entered the fray in the final stages, a company spokesperson refused to either confirm or deny the development. With power major BSES�in which it has a significant stake�already in the race, industry circles said Reliance�s entry now displayed how serious the group was about taking over the troubled Enron subsidiary. �The group can thus place two bids, which reduces the possibility of their losing the race,� an industry source pointed out.

Reliance had earlier said that it would not directly bid for DPC, but would route its interests in the power sector through BSES. Its entry into the race for the beleaguered arm of bankrupt US energy trader Enron therefore, came as a surprise to several observers.

Apart from Reliance, British Gas plc also announced that it was a contender, which industry circles said displayed its interest in the project�s LNG facility.

Both Reliance and British Gas submitted their expression of interest (EoI) to Industrial Development Bank of India (IDBI), the lead financial institution, just before the 5 p.m. deadline expired today.

Sources do not rule out the possibility of British Gas going in for a joint venture with other contenders in the days to come. This, however, could not confirmed by company officials.

Apart from these two new entrants, other bidders include Tata Power Co (TPC), BSES Ltd, Gas Authority of India Ltd (Gail), Royal Dutch Shell, Totalfina Elf and Gaz de France.

Sources added BSES and TPC have already signed confidentiality agreements. While all the eight firms have qualified for the bidding process with a minimum net worth of $ 200 million, only two�TPC and BSES�have paid a non-refundable deposit of $ 100,000, which renders them technically eligible to carry out the due diligence process at the multinational�s data room to be set up in London.

Though senior TPC officials declined to comment, BSES chairman and managing director, R.V. Shahi told The Telegraph the company has signed the confidentiality agreement on Tuesday and that he was looking forward to the commencement of the due diligence process.


New Delhi, Feb. 7: 
Russia has agreed to settle claims of Indian exporters and organisations against the repayment of outstanding payments from the ministry of defence. The agreement was reached on the basis of the findings of a sub-group on banking and financial matters.

The decision was taken at today�s meeting between finance minister Yashwant Sinha and Ilya Klebanov, deputy chairman of the Russian Federation, which also discussed ways to revive shrinking bilateral trade.

The Indo-Russian inter-government commission has introduced rough diamonds, computers and pharmaceuticals as the new items of emphasis in bilateral trade, which fell to Rs 6399.11 crore in 2000-01 from Rs 6807.66 crore in 1999-2000. In this period, India�s exports declined marginally to Rs 4,054.65 crore from Rs 4,107.23 crore, while imports have fallen to Rs 2,344.46 crore in 2000-01 compared with Rs 2,700.43 crore in 1999-2000.

�To boost bilateral trade, we have decided to include new items. India will import rough diamonds from Russia and export computers and drugs. Pharmaceutical consignments will be cleared immediately, instead of being passed in batches, to speed up the process,� Sinha said.

A dozen working groups and 11 sub-groups have been formed to iron out wrinkles in bilateral transactions. The government has also decided to address the concerns of anti-dumping raised by Russia. �We will work mutually to eradicate the problem. At the same time, the working groups will deal with general issues likely to arise later,� Sinha said.

The 12 working groups will deal with trade and economic co-operation, power and non-conventional energy, petroleum, ferrous and non-ferrous metallurgy, science and technology, culture, coal, infotech, environment, civil aviation and others; the sub-groups will look at transport, banking and finance and agriculture.


Mumbai, Feb. 7: 
Taking advantage of the lower interest rates abroad, the Delhi-based Indo Rama Synthetics has decided to raise overseas loans to part-finance a sizeable chunk of its expansion programme. At present, interests rates in the international markets are ruling around 4 per cent.

The company plans to invest over Rs 500 crore in its expansion programme. O.P. Lohia, managing director, Indo Rama told The Telegraph that it is looking at the possibility of financing close to around 50 per cent of its total borrowing requirements from the international markets. �The advantages that accrue from such a borrowing are many. Not only is it at competitive rates of 2 percentage points over Libor, but repayment is over a 10-year time frame. This will benefit us immensely,� he pointed out. Lohia, however, did not elaborate on the parties from whom the company planned to source these funds.

Indo Rama has a capacity of over 2.80 lakh tonnes and according to the company, a market share of 20 per cent of the domestic polyester polymer production. This, combined with the capacities of its associate companies in south-east Asia would put it on the top 10 polyester producers� list world-wide, sources said.

The company had earlier unveiled plans to produce another 3.50 lakh tonnes of polyester staple fibre (PSF), polyester filament yarn (PFY) and PET resin in the course of the next five years.

In the first phase, Indo Rama had said that it plans to add around 30,000 tonnes of PFY by 2002-03 and a further 1.50 lakh tonnes per annum of PSF by 2003-04 at its existing plant at Butibori. The capital outlay of this expansion was put at around Rs 600 crore. In the second phase, it plans to add another 1.75 lakh tonnes of PFY/PSF/PET resin by 2005/06 with an investment of around Rs 800 crore.

The management has identified Zimmer AG of Germany as the technology supplier for its Rs 600-crore expansion project in Maharashtra. However, the project will be taken up after the budget, as duties on machinery are expected to come down. The company also had a dispute with International Finance Corporation (IFC), which, reports said, was resolved recently, with the IFC dropping legal proceedings, apart from agreeing to re-schedule the loans it had extended to Indo Rama. IFC agreed to give a two-year extension to its $26.5 million loan to the company.


New Delhi, Feb. 7: 
After losing out on its bid to pick up a 26 per cent strategic stake in the newly-formed brewery unit of Vijay Mallya-owned United Breweries, South African Breweries Ltd (SAB) launched its world famous brand Castle Lager in the capital today.

�SAB has a well carved out strategy which was formulated four years ago and includes active partnerships (joint ventures) only,� says Richard Rushton, managing director of SAB India Ltd. Castle Lager will be available in a vibrant red and gold package and will have two convenient pack sizes of 650 ml and 330 ml, priced at Rs 35 and Rs 20 respectively.

SAB is the fifth largest brewing company with 98 per cent market share in South Africa and its major brewing and distribution operations are in Africa, central and eastern Europe, central America and Asia. It aims to gain over a 10 per cent market share in the very first year in the regions where the brand is suppose to be introduced.

The company began its Indian operations in October 2000 after it acquired Narang Breweries in Uttar Pradesh.


Calcutta, Feb. 7: 
Even as the new Indica sets the roads on fire with sales touching a whopping 49,000 units in the first 10 months of the current fiscal, Telco is unlikely to end 2001-02 on a bright note, thanks to the depressed commercial vehicles market.

While Indica has managed to tide over initial hiccups and is now the star performer on the Telco bandwagon as sales move north, the company expects overall growth this fiscal to be flat or marginal, due to the fall in sales of utility vehicles.

Addressing a press conference here today Rajiv Dube, vice-president (commercial) passenger car business unit said, �We sold 43,811 units of Indica in the last financial year and expect to close the year with a sales figure of 60,000. But we have not witnessed a significant rise in sales of utility vehicles, which, on the other hand, has gone down by 12 per cent. So at the end of the year we may have some marginal increase in sales.�

Dube, who was in the city to anoint K.B. Motors as the exclusive dealer of Telco, said exports of the Indica have picked up from October last after the car attained Euro-III standards. �Out of the total exports of 4,000 cars, around Indica accounts for 2,000 units,� he said. Telco is tapping the Asia Pacific and West Asian countries for exporting the Indica. It is also confident of registering a cash break-even for the Indica project this year in which it had invested Rs 1,800 crore.

The company currently exports cars to Spain, Italy, Malta, Portugal and other west European countries. �We are also exploring export opportunities in the Asia-Pacific and West Asian countries. Plans will be ready within a month�s time,� he added.

Telco has been able to sell 7,365 units of Indica this January as against sales of 2,959 cars in January last year. Regarding the sudden rise in sales, Dube said: �We have noticed a trend of customers going in for new models in the period January-March. This is one of the main reasons for the increase in sales.�

Telco has bagged a 12.65 per cent market share of the overall car and utility vehicle segment in the first 10 months of 2001-02. In the B-segment, where the company is represented by the Indica, it has registered a 22 per cent market share, while it has a 22.6 per cent market share in the utility vehicle segment.

Dube added Calcutta is a key market for Telco. �In the last month we sold 140 units of the Indica and we expect sales to touch 200 car sales in the coming months.� Commenting on the launch of the Tata Sedan, he said that the company is expecting a similar response for the car like the Indica. �It will be launched by the end of 2002,� he said.

Telco reported a gross sales of Rs 2,080.27 crore in the third quarter ended December, while net loss stood at Rs 55.54 crore.

Regarding the financial health of the company, he said that efforts are on to improve revenues and keep costs under control.


New Delhi, Feb. 7: 
Swedish car maker Volvo Corp today launched its S-60 luxury sedan in India.

The car, previously supplied only to embassies and diplomats, will be imported as completely built units. It has been priced between Rs 21-26 lakh depending on the technical specifications, chairman of the Modi group, U.K. Modi said here.

Volvo has been selling its cars in the country as completely built units exclusively through Modi group company�Modi Motors�since 1985. The company has been re-appointed as exclusive dealer for the sedan.


Calcutta, Feb. 7: 
Caltiger will soon look for a strategic partner to bid for international long-distance telephone (ILD) licences.

The Calcutta-based Internet service provider (ISP) will fund the project through equity dilution and will soon appoint a merchant banker for valuation, which was Rs 40 crore in July. Chief operating officer Sunil Viswanathan says the plan is at a nascent stage and the ball should be set rolling by the month-end.

Those who bid for ILD licences have to pay Rs 25 crore as entry fee, and an equal amount as bank guarantee.

The promoters hold 54 per cent of the company�s Rs 25-crore equity capital, Industrial Investment Bank of India (IIBI) 2 per cent, while Spain�s Transatlantic and Smiffs control 20 per cent each. The rest has been farmed out to strategic investors like WBIDC, IDBI, and others.

Caltiger claimed 2000-01 revenues of Rs 18 crore, of which Rs 8 crore came from advertisements and Rs 9 crore from networking solutions. In 2001-02, the company expects sales to touch Rs 18 crore. Of that amount, only Rs 3 crore will come from advertisements, the rest from networking and value-added services.

The firm�s total debt of Rs 20 crore has been raised largely from institutions, but there were no borrowings in the current fiscal.

Caltiger, the first ISP to introduce free Net access, has changed its game-plan to cope with the slump in advertisement revenues. Its free service is off, and has been replaced with a paid one, under the Caltiger Gold brand name. Asking customers to pay has depressed the number of subscribers from 7.5 lakh to a measly 20,000.

Officials of Caltiger, which has a presence in 24 cities and 50 corporate locations, are optimistic despite the flight of subscribers, and are betting on value-added services to fetch the revenues. Among those is Calvox, a unified message service, and Calfax, or Internet fax.

�We will expand our presence to 50-100 cities in the next three months through the franchisee model. Only the five major metros will be self-managed,� Raja Mitra, senior vice-president of the company told The Telegraph.



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