ITC stakeout keeps Oberois on tenterhooks
LIC moves away from assured return schemes
Philips to phase out black & white TVs
Infosys lives up to billing
Success rubs off on tech stocks
Vizag Steel to double capacity
Motorola bridges technology divide
FI move to recharge Dabhol
Foreign Exchange, Bullion, Stock Indices

Calcutta, April 10: 
The battle on Chowringhee rages with the mandarins at ITC’s Virginia House continuing to stalk the Oberoi-owned EIH Ltd whose jewel in the crown is Calcutta’s stately Grand Hotel.

The ITC stakeout began about two years ago when the cigarettes-to-hotels conglomerate sent the first smoke signals to the market by buying up a little over 5 per cent of the EIH stock.

ITC has continued to buy the EIH stock from the market and it is flirting with a crucial threshold. Its current stake in the hotels major has touched 13.8 per cent, just a shade shy of the 15 per cent threshold when it will have to make a mandatory open offer under the provisions of Sebi’s takeover code.

The Oberois are obviously disturbed by this cat-and-mouse game that is being played out on the bourses. ITC has sold the stock on the markets only to buy it back again. Virginia House has in the past maintained that this is purely an investment play, but the Oberois aren’t buying the theory.

Instead, the Oberois are buying the stock—they have raised their stake in EIH by close to 2 per cent during the last financial year taking their holding to 41 per cent.

The Oberois—who can legally buy up to 10 per cent of the stock now through the creeping acquisition route—do not feel they have yet acquired the aura of invincibility and are expected to continue to raise their holding at every opportunity in EIH, which manages the Oberoi chain of hotels.

During the same period, the ITC investment firms—New Deal Finance, Peninsular Investments and Megatop Financial Services—have ratcheted up their stake by around 3.5 per cent. Their combined holding now is 13.8 per cent. The three investment companies of ITC together hold 72.22 lakh shares of EIH. Their total investment in the EIH stock is around Rs 150 crore.

The market mavens are talking of one interesting development: while ITC and the Oberois are raising their stake in EIH, Unit Trust of India has been selling the stock. The trust’s holding has fallen by about 4 per cent in the last fiscal to 8.07 per cent as of March 31.

In the last quarter of the 2001-02 financial year, the three ITC investment companies raised their stake by over 2 lakh shares, while UTI offloaded over 4 lakh shares.

The EIH brass was concerned with the sudden offloading of shares by the country’s largest mutual fund and had even met the erstwhile UTI chairman P.S. Subrahmanyan to express their displeasure.

The other state-run financial institutions—Life Insurance Corporation, General Insurance Corporation and its four subsidiaries—have not been trading in the stock. They have a combined holding of 24.63 per cent.

EIH had planned to raise capital last year through an overseas float, but some investors were aggrieved with the plan and moved the Mumbai High Court to block it. EIH then withdrew the plan voluntarily.

EIH is in need of cash to finance its properties overseas. The company has entered into an agreement with a conglomerate in Morocco—the ONA group—to build two properties in Marrakesh and Casablanca through a joint venture.

After the agreement was clinched, the hospitality industry has been going through one of its worst phases because of the fallout of the terrorist strikes in the US and India and the turmoil in West Asia.

As tourist inflows have fallen sharply leading to very low occupancy rates in the hotel industry which has had to wage a discount war to seek business.


New Delhi, April 10: 
Life Insurance Corporation today said it would shift focus from assured return schemes and instead come out with more profit-sharing ones.

“We will concentrate on profit-sharing schemes rather than allure people with assured returns,” LIC managing director A. Ramamurthy said.

Although the insurance major did not spell it out clearly, analysts see this as a sign that LIC is following in Unit Trust of India’s footsteps. Earlier this week, the mutual fund behemoth had announced that it would put an end to its assured return schemes.

LIC registered a growth of 42 per cent in premium sales, with earnings reaching Rs 50,000 crore for the financial year 2001-02, against Rs 35,000 crore during 2000-01.

Despite stiff competition from private life insurance companies, LIC recorded a 16 per cent growth in its sale of policies during 2001-02. Total sales crossed the target of Rs 2.32 crore against Rs 2 crore worth of policies sold in 2000-01.

The corporation also recorded a growth of 150 per cent by mobilising around Rs 15,500 crore this year from both sales of fresh policies as well as the renewal of earlier policies, as against only Rs 6,262 crore raised in 2000-01.

The number of single premium policies sold till March 15 this year touched Rs 5,571 crore, as against Rs 930 crore earned in the 2000-01 financial year. Also, the number of annuities sold in the year 2001-02 was marked at Rs 2,635 crore against Rs 335 crore in the previous year.

LIC has closed the year with a whopping Rs 50,000 crore total premium in its kitty, against Rs 35,000 earned last year, marking a growth of 42.85 per cent.

Ramamurthy said that income from other investments is expected to touch Rs 20,000 crore for the year 2001-02.


Calcutta, April 10: 
Philips India Ltd will soon exit the black-and-white television business.

Though managing director K. Ramachandran refused to specify the time by which it would come out of the business, Rajeev Karwal, senior vice-president (consumer electronics), said in New Delhi today that the company may exit the black-and-white television business by the year-end due to the rapidly shrinking market and unsustainable volumes.

Addressing reporters at the end of the company’s annual general meeting, Ramachandran said: “Black and white TVs will soon disappear from the Indian market. We do not manufacture these TVs, but market them under our own brand name and its contribution to our overall performance is nil. We will also phase out these TVs at an appropriate time.”

The B&W television market has come down from 8 million units to 2.5 million units in recent times. In value terms, the black and white TV market declined by 15 per cent in 2001.

Earlier, addressing the shareholders, chairman S.M. Datta said: “The consumer electronics business is not yet out of the woods. After many years of unsatisfactory performance we are at last seeing a growth in volumes and a small growth in market share.”


Mumbai, April 10: 
Infosys Technologies today gave the markets the elixir they had been looking for—a 16 per cent spurt in fourth-quarter net profit and a forecast rosier than many had expected in these testing times. Having racked up a figure of Rs 210.32 crore against Rs 181.67 crore in the same quarter of the last financial year, the company bettered forecasts of Rs 202-215 crore.

A bigger booster, though, was the disclosure that revenue growth in 2002-03 would be between 18.5 and 21.75 per cent.

The company said it expects revenue from software development services and products to be Rs 3,085-3170 crore this year. First-quarter (April- June) income is seen in the range of Rs 684 crore to Rs 694 crore.

For the fourth quarter, income from software development services and products was Rs 680.13 crore, up 21 per cent over Rs 561.87 crore in the same period last year.

Full year net profit increased 28.50 per cent at Rs 807.96 crore from Rs 628.81 crore in 2000-01. Total income shot up 37 per cent at Rs 2,603.59 crore against Rs 1,900.56 crore.

“Last year was difficult, both for Infosys and the Indian software industry. However, there is enhanced interest in the offshore model, though sales and ramp-up cycles have elongated and pricing pressure continues. We believe that the outlook for the next 12 months will continue to be challenging,” Nandan Nilekani, chief executive, president and managing director, said. At a board meeting held today in Bangalore to consider the numbers, the company declared a dividend of Rs 12.50 per share, at a cost of Rs 82.73 crore.

The Infosys share closed at Rs 3,774.95 on the Bombay Stock Exchange, a surge of Rs 171.80 over Tuesday. The company added 29 new clients in the quarter; its top five clients accounted for 24.4 per cent (24.1 per cent) of revenues, and top 10 contributed around 39 per cent.

Mastek net up

The Mastek group reported a net profit of Rs 10.53 crore in the quarter ended March against Rs 0.11 crore in the corresponding quarter of the previous year and Rs 6.09 crore in the three-month period ended December 2001. Total income was Rs 71.58 crore, up 19 per cent over the third quarter of the previous financial year.


Mumbai, April 10: 
The decision of the Infosys board to raise the limit of FII holding to 100 per cent and the better-than-expected predictions about the company’s current year revenues revived the waning interest in the shares of software companies today.

The resurgence was not limited to frontline technology players, but spilled over to second-rung stocks as well.

Infosys’ strength in a slump-stalked market has fuelled hopes that Wipro and Satyam Computers would also unwrap numbers that satiate investors and lift the market. These stocks saw brisk buying by institutional investors and local operators who feel they will come through on the forecasts sent out earlier.

NIIT, Digital Globalsoft were among those that ended gainers today, apart from the Big Three who lead the pack. For instance, NIIT hit the upper-end circuit filter of 10 per cent on the second consecutive day, while Digital closed 8 per cent higher over the previous day.

Among the others which recorded impressive gains were PSI Data Systems, Mastek, SSI, Polaris Software and Hinduja TMT.

Software stocks were among the top traded counters on Dalal Street. Among the top 15 shares that saw the highest deals, 10 came from the software sector.

Infosys flared up by Rs 171.80 at Rs 3,774.95, Satyam Computers by Rs 10.75 at Rs 266.60 and Digital by Rs 53 at Rs 654.35.

Mastek was up Rs Rs 21.95 at Rs 366.60, Hinduja TMT by Rs 46.60 at Rs 299.30, PSI Data Systems by Rs 19.60 at Rs 148.35, Wipro by Rs 113.45 at Rs 1772.90, SSI by Rs 7.00 at Rs 179.65, CMC by Rs 25.75 at Rs 653.70, HCL Tech by Rs 10.35 at Rs 253 and Polaris by Rs 10.75 at Rs 194.20.

Satyam Computers was the largest traded scrip on the Bombay Stock Exchange, with over 68 lakh shares changing hands on a turnover of over Rs 180 crore. It was followed by Digital, Infosys, Mastek, NIIT, Wipro and Hinduja TMT.


Visakhapatnam, April 10: 
Rashtriya Ispat Nigam Ltd (RINL) plans to double the capacity of its Vizag Steel Plant to six million tonnes during the Tenth Plan period.

This will be the second major expansion in recent years in the steel sector after Tata Steel’s cold-roll mill project.

RINL chairman B.N. Singh said the company has set up internal groups to study the feasibility of the expansion. “Once they finalise their study, a vision document will be prepared in September,” he added.

The new plant that will come up as a result of the expansion will exclusively manufacture long steel products, he said.

The move has been spurred by rising demand for long products, a key input for the construction industry, in the domestic market. Asked how much the project could cost in terms of investment, Singh said it would be worked out after the study is completed.

“The expansion may not involve a foreign collaborator since the existing technology can be used.” However, he said the project will need a strong financial partner if the government cannot share the cost.


New Delhi, April 10: 
Cellphone users have never been able to zap messages to each other across the technology divide—meaning that if you are a GSM cellphone user (read Airtel and Command), you can’t send an SMS to someone who uses BSNL’s limited mobility service which uses the CDMA technology.

Enter Motorola which will bridge that divide. Its Global Telecom Solutions Sector today launched its short messaging service (SMS) gateway which will allow telecom operators to provide SMS coverage in their network over different technologies so that subscribers can communicate to more people within an operator’s network.

The SMS gateway is an interactive message routing gateway that enables messaging with external entities outside a carrier’s network. It provides inter-operability for messaging between the majority of wireless messaging technology networks, including Code Division Multiple Access (CDMA), Global System for Mobile (GSM) communications, General Packet Radio Service (GPRS) and Time Division Multiple Access (TDMA).

“With the gateway acting as a link for short message services, operators can more easily launch value-added services,” said Mark Borota, senior vice-president of the Wireless Systems Group in Motorola’s GTSS. “Motorola’s SMS gateway provides simplified network management tasks by providing a single, secure point of entry into and out of their network for all SMS traffic.”


Mumbai, April 10: 
Financial institutions are considering ways to protect their exposure to Dabhol Power Company (DPC) by re-starting operations in the power plant that has now been shut down for almost a year.

The FIs fear that the two-phase project, with a 42,184 MW gas-fired plant lying idle since May last year, will lose its resale value if not preserved well.

“The gas-based power plant and equipment need periodic attention and rotation, and certain parts need lubrication even if it is not operated for power generation,” sources said.

They are keen to see a competent agency assume charge to preserve and, if necessary, resume operations at the plant before the monsoon.

The second phase of the plant (1,400MW) can be subsequently completed and commissioned along with the LNG facility in about 18 months.

The FIs may look to National Thermal Power Corporation (NTPC) and Tata Power Company, both of whom have the requisite credentials in setting up and running plants of this size.

NTPC, sources say, could take up the preservation and operation of the DPC plant. However, the public sector unit has earlier expressed reservations over involving itself with DPC. Nevertheless, sources are confident that with the changed circumstances, and the fact that Indian institutions have more or less taken control over the DPC unit, NTPC may do a rethink.

Tata Power, as a private sector entity, may also be keen to associate itself with General Electric and Bechtel, who are DPC equipment suppliers and erectors. The US contractors also hold a substantial equity stake in the company. However, industry circles argue that with Tata Power being one of the seven interested bidders, the FIs may have to make a tough call, if they decide in their favour.

Meanwhile, DPC’s lenders have decided to appoint yet another set of technical and financial advisors for either an asset or equity sale of the idle and incomplete 2,814 MW power plant.

The advisors, which may look at restructuring, will also be assigned the task of recommending whether the FIs should go in for a sale of assets or equity.

Industrial Development Bank of India (IDBI) executive director A.K. Doda said the advisors, who would be appointed shortly, will also suggest a road map for financial restructuring of the project and for induction of a new sponsor for DPC, adds PTI.

Doda said the lenders had also deliberated upon a possible take over of the plant, enforcing the company’s securities and selling the plant. “But, this was seen as an extreme step and seemed to be too premature a decision to be taken in the present circumstances,” he explained.

Asked if the lenders could still bank upon their earlier deadline of commencing Phase-I of the project this year and commissioning of Phase-II in 2003, Doda said they were optimistic of meeting these deadlines.



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