Race hots up for top finance slot
CII to assess impact of carnage
Gujarat fails to dampen business confidence
One more co-op bank in the dock as RBI wields the stick
Ban puts Triumph clients in a quandary
UTI loses taste for blue-chips
Promoters turn HPL into a divided house
Second Carrier open offer for local unit
LG sets $ 20-m export target for this year
Foreign Exchange, Bullion, Stock Indices

New Delhi, May 8: 
The race for the finance secretary’s slot has heated up with revenue secretary S. Narayan and secretary, department of industrial policy and promotion, V. Govindrajan emerging as the top contenders for the slot from among bureaucrats.

However, sources said the Prime Minister’s Office has let it be known to finance minister Yashwant Sinha that Vajpayee himself would prefer to see a top economist or financial administrator getting the job.

The race among senior bureaucrats to fill up this job started soon after the government approved the nomination of economic affairs secretary C.M. Vasudev as executive director of the World Bank—a position that falls vacant on August 1.

Although Vasudev was never designated finance secretary as there were problems about his seniority vis-a-vis the two other secretary-ranking officers in the ministry, he was functioning as one.

But with the PMO hinting that it would prefer an outside professional, the IAS lobby is keen to ensure that competition between members of its fraternity does not give outsiders a better chance of landing the job.

The last ‘outsider’ to hold the job for most of the 1990s was well-known economist Montek Singh Ahluwalia.

The IAS lobby was never very happy with his appointment as Montek, along with another economist Shankar Acharya who used to head the crucial policy-making economic affairs department, virtually dictated the tone and tenor of the country’s economic policy throughout the period.

The finance secretary wields immense power and the secretaries of all other economic ministries, who are usually IAS officers, have to perforce accept his word as the final decision.

The two other secretaries in the finance ministry—expenditure and revenue—are not usually deciding factors in vital macro-economic policy making and usually play a role in decision-making in budget preparation. They are out of the loop when labour and industrial policy decisions, or even sectoral decisions in areas like aviation or telecom, have to be made.

This is why when Acharya went off on a sabbatical and another ‘outsider’, economist Rakesh Mohan, was appointed in his place, the IAS lobby ensured that Mohan never got the designation of Chief Economic Adviser and always had a senior over his head as secretary, economic affairs.

Mohan was never happy with the situation and eventually quit his job earlier this year. Last October, he had put in his papers but was persuaded by Yashwant Sinha to stay on.

Although Narayan is believed to have considerable political support for his candidature, he has one drawback—he has just one more year to go before he retires. Govindrajan, who is believed to be a favourite of Sinha’s from the time when he had a stint as additional secretary, expenditure, in the finance ministry, has about two more years to go.

Narayan was asked to wait his turn when Vasudev got the pre-eminent job some time back and the powers that be might just feel he has waited long enough.

The other contender for the job—C.S. Rao, the current expenditure secretary—is junior to Narayan and retires around the same time as him. Consequently, ministry mandarins feel his chances are bleak.


Calcutta, May 8: 
The Confederation of Indian Industry (CII) has teamed up with Indian Institute of Management (IIM) Ahmedabad to carry out a survey on the impact of the Gujarat riots on the industry. The report should be ready within three to four weeks’ time.

“The losses are being estimated at Rs 800 crore, of which 50 per cent is on account of deferred demand. The real loss has to be ascertained,” Ashok Soota, president of CII, told reporters at a press conference today.

He said it was wrong to believe that that there will be no impact on foreign direct investments due to the Gujarat mayhem. “The impact will be felt in the next two years,” he said. CII has also set up a social integration committee for the state. “We feel that the people of Gujarat should have safe, secure and secular lives.”

Soota was in the city to discuss CII’s theme for 2002-03 – Competitiveness of India Inc. The focus of the initiative will be on two key elements — competitiveness of the nation in general, and industry in particular.

External parameters will include infrastructure, economic policy reforms at national and state levels, education and training and technology policy. Another important external factor affecting competitiveness is governance and related issues, such as investment climate, law and order situation, security of life and property, transparency, speed and efficiency.

Internal efforts to enhance competitiveness of the industry would include technology, leadership/management competencies, global outlook and benchmarking, quality, productivity and efficiency, environment, compatibility, corporate governance and service quality.

“To help achieve the economic, social and sector-specific objectives of India Inc, the initiatives in 2002-03 will cover broad areas,” Soota said.

The first thing would be to set up four new councils to study developments and formulate strategies in agriculture, manufacturing, convergence and public policy.

The second initiative would lead to the formation of a north-east committee, an economic think-tank called the Centre for Research on Economic and Social Issues and a social integration committee. The body will be headed by well-known economist Subhasis Gangopadhyay.

The third would entail setting up of five committees – a CII-women committee and panels on entrepreneurship, IPR and patents, accounting standards and e-commerce. A new committee on housing will be set up, as will a US-based offshore infotech panel. CII’s entertainment committee will be headed by Vinod Khanna.

The chamber has also formulated specific themes for the four regions of the country. For the east, the focus would be on productivity, for the south it would be technology, for the west it would be manufacturing, and for the north, it would be infrastructure.

Talking about the competitiveness of China and the way Indian companies can deal with it, Soota said CII has appointed McKinsey to conduct a study on the issue.


New Delhi, May 8: 
The initial verdict is out—Gujarat hasn’t blighted business confidence.

Ficci’s business confidence survey released today shows that 64 per cent of the respondents reckon that the prospects of a recovery in the next six months were average while 22 per cent said it was good. Only 14 per cent gave the thumbs down and said the prospects of a recovery were bad.

The survey, which covered 332 respondents nation-wide, says a sizeable 38 per cent reported strong business confidence. Another 44 per cent said their business confidence was average while only 14 per cent said it was low. About 4 per cent of the respondents displayed a very strong level of business confidence.

The study unveiled that a noteworthy 40 per cent of the respondents reported an improved business performance compared with the last six months. About 48 per cent said it would be the same and only 12 per cent said it would be worse.

The survey showed that 21 per cent of the respondents expected higher profits over the next six months while 3 per cent expected to retain their present profit margins. About 24 per cent felt it would be low, but an encouraging 12 per cent said profits would be “much higher”.

Around 41 per cent of the respondents predicted ‘higher to much higher’ sales over the next six months while 14 per cent said it would be ‘much higher’ than before. Around 41 per cent felt sales would remain much the same, only 12 per cent felt it would be lower.

Gujarat hasn’t clouded investment prospects either. A significant 36 per cent reported plans for fresh investments over the next six months— around 30 per cent said investment would go up while 6 per cent said it would be “much higher” than before. The survey said another 47 per cent said investment would remain about the same over the next six months while 17 per cent said it would dip.


Mumbai, May 8: 
Co-operative banks in Maharashtra are feeling the heat after the Reserve Bank of India (RBI) asked the Registrar of Co-operative Societies (RoCS) to supersede the boards of four such banks.

Even as more dubious revelations about involvement of brokers come to light, the RoCS is now involved in a massive audit exercise of all their dealings, particularly in the treasury segment, following instructions from the apex bank.

The Reserve Bank on the other hand, is engaged in a simultaneous probe, where the bank as part of its annual inspection, is looking into the treasury dealings of all the urban co-operative banks.

Yet another bank in the state joined the list today, with the commissioner of co-operatives issuing a notice to the Amravati Peoples Bank asking it why its board of directors should not be dissolved.

Banking sources here said that while the current round of inspections has assumed significance in view of the ongoing developments, it is learnt that the apex bank is presently inspecting the books of both strong and weak banks to gauge their treasury operations.

The RBI conducts on-site inspections of urban co-operative banks under Section 35 of the Banking Regulations Act, 1949.

The periodicity of inspection, according to banking circles, is once a year for weak UCBs and once in three years for well-functioning UCBs, while all other UCBs are inspected once in two years.

Meanwhile, stuck in the quagmire of multi-control of such banks, co-operative banking circles have called for an immediate apex supervisory body, which they aver will clamp down on much of the ills affecting the sector.

Currently, three authorities are involved in regulatory aspects with regard to these banks, the central government, the state government and the RBI.


Mumbai, May 8: 
Triumph International Finance India, the NSE broking outfit declared a defaulter by the exchange, is likely to put several clients who had initiated arbitration proceedings against it in a piquant situation.

NSE had declared the broking outfit, which is linked to Ketan Parekh, the erstwhile bulge bracket broker, a defaulter. The ruling is effective from May 3, after it failed to resolve investor claims, the exchange said.

Triumph International was one of the firms linked to Ketan Parekh that were suspended by the Securities and Exchange Board of India (Sebi).

There were several claims against the broker against whom investors had sought to initiate arbitration proceedings since this was the only option open to them in the first stage. Exchange officials said while the errant broker has been declared a defaulter, the arbitration proceedings — to be overseen by NSE —will continue. Triumph was one of the firms suspended by Sebi under Section 11B of the Sebi Act.

The market regulator barred the company from operating as a stock broker and merchant banker in April last year.

Following this, the exchange had withdrawn the trading facility of the broking outfit on April 5 and the firm was under suspension from the middle of October 2001. It was also declared as a defaulter by the National Securities Clearing Corporation, NSE’s clearing arm.


Calcutta, May 8: 
Unit Trust of India (UTI) has substantially reduced its holding in Reliance Industries, ITC, Infosys and Tisco among other top-rung stocks in 2001-02.

The mutual fund major has also cut investments in stocks like Himachal Futuristic Communications Ltd (HFCL), GTL Ltd (formerly Global Telesystems) and DSQ Software, a move that has provoked much criticism.

UTI, however, appears to be bullish on cement companies, and it has increased its holding in Associated Cement Companies (ACC) and Larsen & Toubro (L&T).

The country’s largest mutual fund reduced its holding in Reliance Industries by over 3 per cent during the year. On March 31, it held 7.65 crore shares in the company, which translates into a holding of 7.26 per cent.

In Reliance Petroleum, however, UTI increased its stake by over four crore shares to 28.78 crore shares — these shares represent about 5.5 per cent of its equity.

The shares of ITC too came under heavy selling as UTI cut its stake in the company by over 2 per cent to 11.79 per cent. UTI sold about 50 lakh shares during the year, and is left with 2.89 crore shares of the cigarettes-to-hotels major.

Another stock that fell out of favour with the Trust was EIH Ltd—the company that manages the Oberoi chain of hotels. UTI’s stake in the company fell by 3.87 per cent or by over 20 lakh shares during the year. This upset the EIH management, which felt the sales helped ITC’s investment firms build up a 13.5 per cent stake in the company.

UTI also sold Tisco in a big way. Its stake in the firm stands at 5.41 per cent compared with 7.54 per cent a year ago. The holding was diluted by selling 78 lakh shares. It now has a little less then 2 crore shares. In Telco, however, UTI raised its stake by close to 28 lakh shares to 1.45 crore shares.

Among the cement scrips, UTI increased its holding in L&T by over a per cent and in ACC, by a little less than that, while in Grasim Industries, its stake remained more or less unchanged at 5.9 per cent.

UTI holds 11.38 per cent in L&T. Its holding went up by 55 lakh shares to 3.07 crore shares. In ACC, UTI picked up an additional 11 lakh shares during the year, to take its holding to 71.85 lakh shares. This translates into an equity stake of 4.21 per cent.

Among IT companies UTI sold Infosys extensively, and Satyam too, to some extent. In Infosys, UTI held 4.95 per cent as of March 31, 2002 as against 8.38 per cent a year ago. The fund sold close to 23 lakh shares of Infosys during the year. In Satyam, it holds 6.57 per cent compared with 7.88 per cent a year ago.

Among the K-10 stocks, the mutual fund pared its holding in HFCL by 4.67 per cent to 7.99 per cent, while in GTL, it nearly halved its stake to 3.57 per cent.

In Zee Telefilms, however, UTI increased its holding marginally from 3.78 per cent to 4 per cent. In DSQ Software, UTI continues to hold 2.73 per cent or 12.91 lakh shares even after reducing its stake by over a per cent in the last 12 months.


Calcutta, May 8: 
A section of the state government has sensed an arrangement under which Purnendu Chatterjee would be handed a 50 per cent stake in Haldia Petrochemicals (HPL), a sure-fire recipe to turn away the desperately courted Indian Oil Corporation (IOC). The other half, sources say, would remain with Bengal.

Amid the welter of proposals and counter-proposals being churned to win over IOC, the possibility of an arrangement in which the state and Chatterjee control HPL is tell-tale evidence of the double-speak on the issue.

At a meeting on April 30, IOC asked The Chatterjee Group chief to send an amended proposal, but officials say he has not done so. “At the meeting, state commerce and industry secretary, Jawhar Sircar, and Chatterjee agreed to send a proposal. Since we do not have the fresh plan in hand, we are unable to take up the matter with financial institutions,” the officials said.

A scheme that favours Chatterjee will hardly be acceptable to the petroleum major, which insists that the state government and the TCG chief should hold no more than 24 per cent if they want it to participate in the project.

As the conflict of interest intensifies and the promoters toss up proposals that contradict each other, Indian Oil officials have stuck to their guns, saying there is no change in the conditions laid down before.

“We are sticking to our old formula. IOC will hold 26 per cent, and the state government 24 per cent. Chatterjee will have 25 per cent and the remaining 25 per cent will be controlled by financial institutions. We will wield majority control in HPL,” IOC officials said.

HPL chairman Tarun Das said in Calcutta last week that a joint venture agreement is being worked out even as IOC officials said Chatterjee had not sent them a revised proposal.

IOC said its proposal requires banks and the financial institutions to hold 25 per cent in Haldia Petrochem, but they cannot sell their stakes before five to seven years.

“Some of HPL’s debts must be converted into equity. Lenders have a huge exposure to the project. However, one of the majority shareholders has failed to appreciate it. This is the problem. Unless it is sorted out, it will be difficult to resolve the tangle,” IOC officials said.

Banks and FIs have lent nearly Rs 4,200 crore to HPL, which pays Rs 500 crore in interest on the borrowings every year. The project’s earnings before depreciation, interest and taxes (EBIDT) is positive, but it is bedevilled by a cash loss because of the high interest burden.

IOC reiterated that they are keen to invest in HPL. “We have bid for IPCL. If we get it together with HPL we become a dominant market player. And that is our goal,” they said.

The paid-up equity of HPL is Rs 1,260 crore of which Purnendu and Bengal hold 43 per cent each. The remaining 14 per cent is with the Tatas, who want to quit the project but have not signed a share-transfer agreement with the state government so far. Sources said there is a possibility the Tatas might be left with a token presence—a 2-3 per cent stake.


Mumbai, May 8: 
US-based Carrier Corporation today sought to further strengthen its hold over the Indian subsidiary Carrier Aircon Ltd by making a second open offer to pick up 14 per cent in the company at Rs 100 per share.

If the US parent is successful, it might lead to eventual delisting of the Indian arm from the bourses.

DSP Merrill Lynch Ltd informed the stock exchanges that Carrier International Mauritius Ltd, a company registered under the laws of Mauritius, along with Carrier Corporation (Carrier Corp), a company incorporated under the laws of Delaware, USA and Carrier Singapore (Pte) Ltd , a company registered in Singapore, as persons acting in concert in making the offer to the shareholders of Carrier Aircon Ltd.

The offer is to acquire up to 32.12 lakh shares or 13.71 per cent of the paid up equity share capital of the company. They represent the balance outstanding equity share capital of Carrier Aircon.

Carrier Mauritius, it added, holds 82.65 lakh equity shares representing 35.29 per cent of the paid up equity share capital of Carrier Aircon, while Carrier Singapore does not hold shares in the company. Carrier Corp with 1.19 crore equity shares hold 51 per cent in the company.

DSP added that if pursuant to the offer and acquisition of shares from the open market or through negotiations or otherwise, the public shareholding falls to 10 per cent or below of the voting capital of Carrier Aircon, then in terms of Regulation 21(3) of the Securities and Exchange Board of India’s Regulations, Carrier Mauritius will make a second offer to buy out the remaining outstanding equity shares held by the public shareholders within three months from closure of the offer, at the same offer price. The second offer would remain open for six months.

Consequent to the public shareholding falling below 10 per cent, Carrier Mauritius and the persons acting in concert will request Carrier Aircon to approach the stock exchanges, where the shares are listed, for delisting of the shares.

In May last year Carrier International Mauritius, Carrier Corporation and Carrier Singapore (Pte) made an open offer to the shareholders of Carrier Aircon for acquiring 49 per cent of the latter’s holding at a price of Rs 100 per share.

Carrier Aircon has a significant share in the window air-condition and mini-splits market in the country.


Calcutta, May 8: 
LG Electronics India (LGEIL) has set an export target of $ 20 million for this year, almost twice last year’s figure. The company will export products to Sri Lanka, UAE, Bangladesh, Philippines, Hong Kong, New Zealand and South Africa.

LGEIL, the subsidiary of the Korean electronics major LG Electronics, has 31 models in the CTV segment, of which six models are in the flat TV segment.

Says Chandramani Singh, national head of the CTV division, “Last year, the export figures were just over $ 10 million. This year, the target has been doubled. We plan to sell around one million CTVs in 2002, which is a 54 per cent growth over last year.”

LGEIL sold 6.5 lakh CTVs last year. The company’s second manufacturing unit is in the pipeline and the site and investment will be finalised within the next two to three months.

“Our manufacturing unit at Noida has a capacity of one million CTVs. We also have sub-contract units at Mohali, Hyderabad, Calcutta, Nasik and Bhopal. There are plans to set up a few more units in the eastern and southern region,” adds Singh.

In 2001, revenues from the CTV business were at Rs 780 crore, which the company expects to take to around Rs 1,400 crore by the year-end. CTVs contribute to around 40 to 45 per cent of the Rs 2,216 crore turnover of the group. The company expects to clock around Rs 2,700 crore in its accounting year January-December 2002.

LGEIL has a 12 per cent share of the CTV market and expects to garner a 17 per cent share this year. By 2003, the company expects to capture around 21 per cent of the Indian CTV market.

40 per cent of its sales are in the low-end segment (14-inch and 20-inch), with the urban areas contributing to 70 per cent of the sales.

LG has launched a 20-inch soccer TV, which will be sold at all 73 locations where the company is present. The TV will be available at a special price of Rs 11,990 for Bengal and Rs 12,990 for the rest of the country.

LG expects to sell 6,000 units of the soccer TV. The company is also expecting a record turnover of Rs 443 crore with the sale of 2.5 lakh CTVs during May and June this year.

Speaking on the contribution of the eastern region to the company’s growth, Pradeep Tognatta, vice-president, sales and marketing, says, “Last year, the region has seen a 38 per cent growth over 2000. The total contribution to the national earnings was 4 per cent in 2001, which is expected to go up to 6.5 per cent this year.”

Revenues from Bengal stood at Rs 90 crore last year and is expected to double to Rs 180 crore this year.

IPO in five months

Meanwhile, LGEIL plans to float an initial public offering (IPO) within the next five months.

Pradeep Tognatta, said that the company would divest 20 to 25 per cent of its stake through the issue. The IPO had earlier been deferred due to unfavourable market conditions.



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