Kirloskars cede 10% more to Toyota
IOC opens fresh talks with Haldia Petro
Sops for special economic zones
Court restrains Dabhol Power
Net phone norms in place
Sebi meeting a damp squib
Hint of softer stand on labour reform
Foreign Exchange, Bullion, Stock Indices

New Delhi, March 21: 
Even as the government and Suzuki squabble over the stake selloff in Maruti Udyog, Japan�s biggest carmaker Toyota Motor quietly received an approval from the government today to raise its stake in its car venture at Bidadi in Karnataka to 99 per cent from 88.8 per cent, leaving the Kirloskars with only figurehead status in the joint venture with an equity holding of just 1 per cent.

The Foreign Investment Promotion Board (FIPB) today approved the Toyota proposal to raise the stake in Toyota Kirloskar Motor Ltd. The Kirloskars will, however, have the option of buying back up to 26 per cent�an option they can exercise any time until 2004.

As a consequence, there will be no change in the name of the joint venture and Vijay Kirloskar will stay on as vice-chairman.

Toyota will be picking up the 10.2 per cent stake at a cost of Rs 106.5 crore. �The company felt that there was need for more investment and the Kirloskars agreed to reduce their stake in order to bring in additional investment in the company through its partner�Toyota,� the company spokesperson told The Telegraph on the line from Bangalore.

�However, the Kirloskars still retain the option of buying back 26 per cent before 2004. The reduction in stake will have no impact in the existing structure of the company or its name,� the spokesperson said.

This is the second time that the Kirloskars are ceding stake to the Japanese carmaker, which is world�s third largest automaker after GM and Ford. The joint venture was launched in 1997 under a 74:26 equity partnership between Toyota and Kirloskar in an equity capital of Rs 6000 crore.

A couple of years ago, Toyota bought a 14.2 per cent stake in the company from the Kirloskars with an additional equity investment of Rs100 crore. The company plans to introduce the Camry, a family sedan, and Prado, a sports utility vehicle, in India by importing them as completely built units (CBUs). The Camry, which is due to be launched later this year, will be positioned against Honda�s Accord and is likely to be priced above Rs 20 lakh. That would make it costlier than the Accord, but that is largely because of the120 per cent duty that Toyota will have to fork out for CBU imports.

Toyota is also planning to launch a mid-size car by the year-end. The mid-size passenger car will be manufactured at its plants near Bangalore. Recently, it had secured permission from the Foreign Investment Promotion Board (FIPB) to import passenger cars. The company will infuse more investment in the next few years to manufacture a mid-size passenger car. The buzz is that the model being considered is Yaris, a roomy supermini which is available worldwide with a 1-litre and 1.3-litre engines, but the spokesperson denied this.

�The market is open for the introduction of new models. There would also be a few variants of our existing models that could be rolled out in the next few years. This will depend on the inputs from the customers,� said company sources.

The company had been mulling the possibility of launching a small car form the Daihatsu stable but later shelved the plan. Toyota has a 50 per cent stake in Daihatsu, the Japanese small car maker.

Suzuki scooters

In another significant development, Suzuki Motor Corporation today received government approval to invest Rs 47 crore to set up a subsidiary in Haryana to manufacture two and three-wheelers and allied products, including motorcycles and scooters. The Japanese major, which is in talks to buy a portion of the government�s stake in Gurgaon-based Maruti Udyog, the country�s largest carmaker, broke off its 15-year alliance last year with TVS of Madras.

Suzuki Motor, which was at one time flirting with Bajaj Auto to make motorcycles in the country, has now decided to go it alone. Bajaj partner Kawasaki has an understanding with Suzuki to market two-wheelers outside Japan. The ties with TVS were snapped last September with Suzuki selling off its 25.97 per cent stake to TVS for a consideration of Rs 90 crore.

However, TVS was permitted to use the Suzuki brandname till April 2004 and there was a restraint on Suzuki from entering the market with its two-wheelers. In a fit of pique, however, TVS broke off this agreement in late December�30 months before it was supposed to expire�and decided to market its products under its own brandname. The TVS-Suzuki agreement will expire on April 30 this year, paving the way for the re-entry of Suzuki two-wheelers in the country.


Mumbai, March 21: 
Indian Oil Corporation (IOC) has resumed dialogue with Haldia Petrochemicals Ltd (HPL) for partnering West Bengal�s showcase project, reiterating its demand for management control in the latter.

Stating this at a news conference here today, chairman M.A. Pathan said while the corporation was optimistic of creating a win-win situation for both IOC and HPL, a few crucial points would still have to be looked into.

HPL, he said, would have to successfully re-negotiate its loan (debt-equity ratio) with the FIs, apart from the present promoters underwriting the project�s losses. Yet another issue that has to be sorted out was lifting of naphtha, HPL�s main feedstock, from IOC�s refinery nearby.

Senior IOC officials told The Telegraph that the company continues to insist on HPL meeting certain conditions, to ensure the project�s financial viability before investing in it.

�HPL�s promoters always have the option of taking on the project from where it is now and making it workable over a period of time,� Pathan pointed out.

The IOC chairman made these comments while commenting on the corporation�s efforts in building a vertically integrated oil company.

This would include oil exploration activities in joint ventures and also a foray into petrochemicals.

Further, IOC said it was still in the running for HPCL and BPCL, as it had not received any communication from the government ruling it out from the race.

While IOC has already indicated that it would bid for IPCL, efforts are also on to set up an independent petrochemical project that would manufacture PTA, paraxylene and PET, work on which will commence by August this year. With global petrochemical prices showing signs of bottoming out, Pathan was of the opinion that by the time IOC�s petrochemical unit starts commercial production, prices would be favourable.

IBP operations

IOC is moving towards synergising its operations with those of IBP, which it acquired recently.

The corporation has set up a committee to look into every aspect of �integrating operations� between the duo, which will focus on utilisation of retail facilities, Pathan said. The acquisition would result in IOC having a share of over 55 per cent in the retail market of petro products.

In an indication of the aggressive tone the corporation plans to adopt in the post-APM era, Pathan said each participant would be �for himself�.


New Delhi, March 21: 
The government has decided to provide a raft of concessions to promote the development of special economic zones (SEZs) in the country and break the procedural gridlocks that usually deter investors. For a start, the government will waive duty on goods sources from abroad as well as the domestic tariff area (DTA) for the development and operation of an SEZ.

Commerce minister Murasoli Maran said the government was also planning to make changes in the coastal regulation zone to accommodate the SEZs. This is to permit non-polluting and foreshore activities within the regulated zone. The coastal regulations set severe restrictions on the construction of buildings near the coastline because of environment considerations. The minister said efforts were also on to ensure that units within the SEZs would have access to cheaper and quality power from sources of their choice.

Addressing an international convention on SEZs organised by the Ficci here today, Maran said provisions were also being made to ensure that facilities of duty drawback and DEPB benefits are available to any supplies made from the DTA) to an SEZ. Also, efforts are under way to exempt sales made from DTA to SEZs from the purview of central sales tax. The declaration of SEZs as a port/ICD as transaction cost reduction measure as well as framing unified regulation covering the operation of SEZ unit are also under consideration.

V.K Sharma, chief of special projects at Tata Steel, said it is in talks with the government of Orissa to set up an SEZ in the next three-to four years in the state. It has already formed a special purpose vehicle with the state government to develop infrastructure and are now looking at investments in the region of Rs 3,000 crore.


Mumbai, March 21: 
The Mumbai high court today restrained Enron-promoted Dabhol Power Company (DPC) from initiating bankruptcy, winding up, liquidation or restructuring proceedings in a US court and ordered appointment of a court receiver to preserve its assets in India.

Justice P.V. Kakade, hearing a suit filed by IDBI-led lenders, in an ad-interim order, also directed that status quo be maintained in respect of DPC�s funds in Bank of America to the tune of $ 8.4 million.

Making notices returnable after two weeks, the judge held that all these issues were being kept open. He also accepted the assurance of IDBI�s counsel Harish Salve that the court receiver will be put in charge of DPC�s funds.

The court has restrained DPC from filing bankruptcy, winding up, liquidation or restructuring proceedings under chapter 11 of US bankruptcy code or any other similar proceedings subject to the jurisdiction of a US court. The suit, filed by IDBI, ICICI, IFCI and SBI, urged the high court to restrain DPC from moving any court in the US for bankruptcy proceedings.

The plaintiffs apprehended that DPC may file bankruptcy proceedings in the US resulting in American unsecured creditors taking over money and assets of DPC. In such an event, the plaintiffs feared that they will lose hold on DPC�s assets although they were secured creditors. The plaintiffs submitted that they did not desire to fight litigations in the US because they were secured creditors and had rights over DPC�s assets located in India.

They apprehended that if the bankruptcy proceedings were initiated in a US court then DPC�s assets in India will be attached and the multinational will shut down its project for sale to any party.


New Delhi, March 21: 
Your local �cable franchisee� can now offer internet telephony from an internet service provider�but the quality of voice over the flimsy cable may not be of great quality unless he installs equipment to improve it.

The government today issued the guidelines for internet service providers (ISPs) to offer internet telephony but left many grey areas in the order, which need to be explained before April 1, the day set by the telecom regulator for commencement of the service.

The Telecom Regulatory Authority of India (Trai) had told the government that the existing fixed line and cellular operators as also national long distance service providers would be allowed to deploy voice over internet telephony (VoIP) based backbones to offer various services as specified in their respective licences.

But the government order issued today is silent on this issue. There is also a little source of worry for ISPs which have not paid a dime to the government for their licences. Today�s order has inserted a clause that says the government could impose a licence fee, including universal service obligations, on ISP licensees.

The ISP licences were given free for a period of five years (starting from November 8, 1999) and a licence fee of one rupee was to be charged after the end of five years. The order says only ISP licensees are permitted, within their service area, to offer such service.

The customers of internet service providers can avail internet telephony from their personal computers (PCs) capable of processing voice signals or other IP-based customer premises equipment (CPE) like PC to PC (both within as well as outside India), PC to Telephone (PC in India to telephone outside India), and IP-based H.323/SIP terminals in India to similar terminals both in India and abroad, employing the IP addressing scheme of IANA (Internet Assigned Numbers Authority).


Mumbai, March 21: 
The Securities and Exchange Board of India�s (Sebi) renewed effort to reach out to India Inc today met with partial success.

Today�s meet was an effort by the market regulator to grasp critical issues concerning the domestic capital market. In fact, new Sebi chairman G.N. Bajpai has been holding a series of meetings with market intermediaries like brokers, merchant bankers, exchange officials and chartered accountants to understand the capital markets. The last of the series of meetings, to be held on Friday, is with the editors of prominent publications.

The closed-door meeting, which saw the Sebi boardroom only half-full, was attended by Anil Ambani, managing director of Reliance Industries, Rahul Bajaj, CMD of Bajaj Auto, Shashi Ruia, chairman of the Essar group, Subhash Chandra of Zee Telefilms, ITC chairman Yogi Deveshwar, HDFC chief Deepak Parekh, A.M. Naik, managing director of Larsen & Toubro, Sunil Mittal of the Bharti group, Adi Godrej of the Godrej group and Ajay Piramal, chief of Nicholas Piramal.

A notable absentee was Ratan Tata. In fact, the house of the Tatas went unrepresented. The infotech czars of the country�Narayana Murthy of Infosys, Azim Premji of Wipro and Ramalinga Raju of Satyam Computer�also gave the event a miss. Also conspicuous by their absence were TVS chief Venu Srinivasan, and pharma bigwigs Anji Reddy of Dr Reddy�s and R. S. Brar of Ranbaxy.

The meeting comes soon after Sebi clamped down on companies who went on a binge announcing interim dividends to their shareholders. It ceased only when Sebi issued a directive to the bourses not to relent on the notice periods specified for record dates, forcing companies to roll back their interim payout announcements.

Meanwhile, BJP member Kirit Somaiya today demanded that the government ask Sebi to plug existing loopholes, and come out with comprehensive guidelines on preferential allotment of shares, to protect small investors.

Speaking in the Lok Sabha, Somaiya said promoters of several multinationals make preferential allotments at lower rates and sell them in the open market when rates are high, raking in huge profits.


New Delhi, March 21: 
The government today indicated that it was �not inflexible� on its controversial labour reform measure that will give industries employing up to 1,000 workers permission to close their units without having to seek prior permission.

�The Prime Minister has made it clear that labour reforms will be discussed in detail. We are not inflexible on the number of workers. Numbers will be discussed. There will be a debate on this topic. Only then will we take the next step,� labour minister Sharad Yadav said during question hour in the Rajya Sabha. Some Left parties members wanted Prime Minister Atal Bihari Vajpayee, who was present in the House, to provide a clarification on the issue, but he chose to remain silent.

The proposal to amend the Industrial Disputes Act, 1947 was announced in last year�s budget.



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