Reliance outbids rivals for IPCL
Selloff jitters rattle market
New helmsmen for GIC arms
Excise waiver for 7 naphtha power plants
SMIFS threatens to sue BSL
Dreams die young for ISP licensees
Brakes on marquee launch of marques
Fresh A-I move for better slots at Heathrow
Baskin Robbins� cool offer for the summer
Foreign Exchange, Bullion, Stock Indices

New Delhi, May 17: 
Reliance Industries appears to have emerged as the winner in the race to pick up a 26 per cent strategic stake in Indian Petrochemicals Ltd (IPCL) that the government has put on the block.

When the bids were opened today, Reliance was the frontrunner with a top bid of Rs 200 per share. Sources said state-owned Indian Oil Corporation, which was seen as a strong contender, had put in a bid of between Rs 150-160; detergents maker Nirma bid Rs 185-190; the fourth bidder, Indo-Rama�s price was not known. The Oil and Natural Gas Commission (ONGC) had made a last attempt to team up with IOC to mount a joint bid for IPCL but failed to pull it off.

Sources said the reserve price for the Vadodara-based petrochemicals maker was reportedly Rs 136 per share. The final decision will have to be approved by the cabinet committee on divestment (CCD) which is meeting tomorrow.

Sources in the disinvestment ministry said: �All the bids are above the reserve price set for IPCL. Going by the general norms, the highest bidder should get the stake; however, it is up to the Cabinet to decide whom it should pick as the strategic partner.�

Controversy erupted just weeks before the bidding closed after the Central Bureau of Investigation filed charges against three Reliance executives for violating the Official Secrets Act two years ago, when some documents were found in their possession. The three executives were later released on bail.

The government and the bureaucrats have been sharply divided on the Reliance bid with a very strong lobby trying to keep it out of the bidding process. Disinvestment minister Arun Shourie has gone on record saying there appeared to be nothing in the case against the three executives that could deny it the right to bid.

Currently, the government holds a 59.95 per cent stake in IPCL. It has decided to offload 51 per cent in two phases. The management control will be transferred to the successful bidder for the 26 per cent stake within the current financial year. The new partner will have the right of refusal for the remaining 25 per cent.


Mumbai, May 17: 
The equity market extended its losses to the fourth straight day as concerns over a skirmish with Pakistan mounted and reports surfaced about the disinvestment plan running into a wall of resistance.

The Bombay Stock Exchange (BSE) sensex closed 21.85 points lower at 3333.76 as operators and investors saw a Parliamentary panel queering the pitch for planned selloffs in Hindustan Petroleum and Bharat Petroleum.

Shares of public sector companies, the toast of the market in recent months, took it on their chin as players rushed to dump them on reports that a House committee had made a recommendation that the government�s stakes in BPCL and HPCL should not be sold.

In a reflection of dismay, the BPCL stock, which had risen to a day�s high of Rs 301.10, plunged to its low of Rs 267.15. HPCL, too, displayed a similar weakness, when it plummeted to Rs 265.55 after opening at Rs 293.90 and flaring up to the day�s high of Rs 297.15 early on.

The tide turned later in the day, when a statement from the Centre that it had not accepted the Parliamentary panel�s suggestion helped these stocks recoup losses. The government said it would go ahead with the disinvestment, though that did not stop BPCL from closing more than 3 per cent lower at Rs 285.75; HPCL also lost over 2 per cent to end at Rs 286.40. At their lowest points today, the two had shed almost 10 per cent.

The market was also on the edge because of the uncertainty over the line that Prime Minister Atal Bihari Vajpayee would take in Parliament on the terrorist attack in Jammu that killed 32 people on Tuesday.

Mirroring the volatility, the benchmark 30-share sensex opened at 3357.29, moved between 3373.86 and 3310.86 before ending at 3333.76 against Thursday�s close of 3355.61, netting a loss of 21.85 points or 0.65 per cent. Today�s figure represents the lowest close since April 29.

Sources said it was the gains notched up by heavyweights Reliance Industries and Reliance Petroleum that helped contain the weakness in the market.

IPCL steals show

The IPCL share topped the turnover chart on the BSE, hitting its highest level since December 1999 in intra-day deals as the market had its attention riveted to the disinvestment of the government�s stake in the PSU.

On the BSE alone, over 75.46 lakh IPCL shares were traded, generating a turnover of Rs 101.95 crore. On the NSE, the total traded volume was much more at 1.15 crore shares, yielding a turnover of Rs 156.61 crore.

However, the scrip came off its high at Rs 139.90 and ended with a loss of Rs 1.80, or 1.33 per cent, at Rs 132.70.


New Delhi, May 17: 
Three public sector insurance companies will have new helmsmen from Monday. Industry sources said R. Beri is tipped to take over as chairman and managing director of New India Assurance, S. L. Mohan will head Oriental Insurance and H. S. Wadhwa will call the shots at National Insurance Company.

United India Insurance is the only insurer which has its chairman-cum-managing director in place � V. Jaganathan.

Beri will be replacing K. N. Bhandari, who retired as the CMD of New India Assurance on February 28 this year. Mohan will step in for B. D Banerjee from Oriental Insurance who retired on October 31 last year. Wadhwa will succeed M.K Tandon, who retired on October 30 last year.

Beri is already running the operations at New India Assurance though he hasn�t been designated as CMD as yet. He is just waiting to receive the official clearance from the finance ministry.

Beri had been earlier working with New India but was transferred to the Tariff Advisory Committee as general manager. He reverted to the insurance company recently.

S. L Mohan is the general manager of United India Insurance and the only candidate who will be shifting � from United India Insurance to Oriental Insurance Corporation. He has been working for United India from a fairly long time.

H. S Wadhwa is running the affairs at National Insurance Company and has been serving the company for a long time now. The process for selecting the new CMD�s began two months before the earlier incumbents retired.

The Committee of Secretaries (CoS) submitted its recommendations to the finance ministry. The CoS comprises the finance secretary, personnel secretary, secretary-banking and IRDA chairman.


Calcutta, May 17: 
The finance ministry has exempted seven naphtha-based power units from 16 per cent excise duty.

Those that will benefit from the decision are the Tamil Nadu Electricity Board�s 120 MW combined cycle gas turbine power plant at Basin Bridge, Chennai, Nagarjuna Electric Generating Company�s 20 MW power plant in Andhra Pradesh, Essar Power�s 515 MW power plant at Hazira, Gujarat Industries Power Corporation�s 167 MW plant at Vadodara, Reliance Salgaoncar Company�s 48 MW unit in Goa, Tanir Bavi Power Company�s 220 MW plant at Mangalore and BSES Keral Power�s 165 MW station in Kerala.

Power companies had long been pressing for the tax exemption on naphtha. �It will help reduce their cost of generation,� senior officials in power companies said. However, they feel the government should be more liberal in granting the relief. �A whole lot of private power companies had applied for exemption. But the government has given approval to only seven of them. Even National Thermal Power Corporation was not given this facility,� said Harry Dhaul of Independent Power Producers� Association of India

�This is a welcome step from the government�s side. It will help us reduce the cost of generation,� said a senior official of Essar Power, which is setting up a 515 MW combined cycle power plant at Hazira. The company has decided to sell 300 MW to the Gujarat State Electricity Board, while the remaining 215 MW will meet the energy requirements of Essar Steel Limited.

The officials of BSES are also happy with the finance ministry�s move. BSES Kerala Power, a subsidiary set up by the Mumbai-based utility and the Kerala State Industrial Development Corporation, is setting up naphtha-based 165 MW plant at Kochi. It has entered into a power-purchase agreement with the Kerala State Electricity Board to sell its output to the state grid.

Power is a key input for economic development. Accelerated economic growth hinges on the availability of adequate and sustained electricity at reasonable rates. �Cheaper raw material will help companies provide power to consumers at competitive rates,� Dhaul said.

India has a massive potential in power generation, transmission, distribution, renovation, besides modernisation of plants and associated activities.

The power sector is likely to add 1,00,000 MW in new capacity over the next 10 years. �Growth projections for power hold out big opportunities for the private sector to supplement government�s plan to provide electricity on demand by 2012. This would require an investment of approximately $ 160 billion,� power ministry officials said.


Calcutta, May 17: 
SMIFS Capital Services is threatening to initiate criminal proceedings against textile major BSL Ltd � formerly known as Bhilwara Synthetics Ltd � for not transferring one lakh shares bought by it from a sister concern.

BSL faces a takeover threat from jute baron Ghanshyam Sarda, who has amassed a substantial holding in the company. Sarda says his holding is close to 12 per cent, which includes around 6 per cent sold by the SMIFS group. Director of SMIFS Capital, Kishor Shah said: �The shares (that BSL refuses to transfer) were bought from SMIFS Capital Market. Not only does BSL refuse to transfer and dematerialise the shares, it has not even returned them to us. �We lodged them for transfer in September last with BSL�s registered office in Bhilwara, Rajasthan. Five months after the shares were sent, the company informed us that a committee of directors decided against transferring them.

�They referred the matter to the Securities and Exchange Board of India (Sebi) to create confusions. Sebi called on us for some clarifications, which we readily offered. Since then we haven�t heard from the market regulator either.

�We have issued a legal notice to BSL now, seeking explanation for not transferring the shares and also claiming compensation for the financial loss that the delay in transfer may have caused.�

The legal notice was dispatched late last month. SMIFS Capital would wait for a month before initiating criminal proceedings against BSL, Shah said, adding: �Withholding shares lodged for transfer is a criminal offence.�

The BSL management refused to speak on the matter. They have also maintained silence on the acquisition of shares by Sarda. In response to it, the promoters of BSL � the Churiwals and Jhunjhunwalas � bought shares from the market to raise their holding to over 36 per cent.

Sarda says he continues to buy the BSL stock from the market, but the problem is, there is little floating stock in the market now.


New Delhi, May 17: 
Internet service providers have started to down their shutters, scrambling to get out of a business that they had hot-footed into about four years ago.

Sources say 105 internet service providers (ISPs) have handed back their licences to the government and many more are expected to join the exodus.

There are two reasons for the mad scramble to get out of the business: first, the future in the retail-to-home ISP segment appears bleak and even big-time operators like the Bharti-owned MantraOnline are getting ready to pull the plug. Bharti, however, has developed its satellite-based SkyMantra service but it will essentially be targeting corporate customers.

Second, the companies are afraid that a review of the ISP business at the end of five years could see penalties being imposed for non-performance. Of the roughly 500 entities that were issued ISP licences, only about 150 have started their services.

�Since there is no deadline by when companies must quit, a few more companies could exit in the next few months. If the companies with a licence for five years have nothing to show in terms of performance at the end of the period, they could end up having to pay a heavy penalty and forfeit their bank guarantees,� said sources in the communications ministry.

Early this year, the department of telecommunications (DoT) had simplified the exit policy to allow the ISPs to surrender their licences without starting the service after paying surrender charges.

The huge gulf between the number of entities that were issued licences and those that have started operations means that DoT will suffer a notional loss of Rs 200 crore by way of bank guarantees that it would have been able to encash if the licensees were unable to establish services.

When it threw open the ISP arena, the government had handed out the licences without charging an entry fee but had insisted on bank guarantees.

The licensees were divided into three categories �A, B and C. The performance bank guarantee was fixed at Rs 2 crore for category A (about 90 companies had applied). The bank guarantee amount was set at Rs 20 lakh for category B and Rs 3 lakh for category C. There are about 150 category B licencees and about 110 category C licencees.

The ISP policy had permitted 49 per cent foreign investment and a 15-year holiday from any licence fee, unlike telecom services providers who had to bid huge sums to secure their licences.

DoT had also grudgingly permitted the ISPs to provide �last mile links� that would enable them to connect subscribers to their computer servers. However, last mile links included a rider whereby ISPs could only set up such links if they were �point-to-point� and of �leased line capacity� (64 kilobytes per second or above).

The ISPs were given 18 months to launch their service from the day of signing the licence. Amitabh Singhal secretary general of the Internet Service Providers Association (ISPAI) said, �Many more will exit soon. It was a good move that will benefit the government and the industry.�

The charge for surrendering the ISP licences has been fixed at 5 per cent of the performance bank guarantee (PBG) amount.


New Delhi, May 17: 
Carmakers who were supposed to launch a slew of models this summer have had to put them off till the festival season as they wait for the long-drawn homologation process to be completed.

Carmakers were gung-ho about unveiling new models�all to be imported as completely built units (CBUs)�but have had to cut the pace on their new launches because of a rather long drawn out homologation process.

Homologation is an exercise that involves a number of tests to check whether the model conforms to Indian auto standards after which the government gives its approval.

DaimlerChrysler India (formerly Mercedes Benz India) is one of the first to secure homologation approval for its M-class car�the off-roader that has already hit the Indian roads. The other cars on offer from the Mercedes stable are likely to finish homologation by the festival season�late August to October. The other Mercedes models that are waiting for the required approvals include the SL 500 sports vehicle, C class sports coupe, SLK open-top drive and the A-class compact.

Everyone wants to hit the Indian roads by the festival season when the Indian consumer�usually a tightwad for the rest of the year�splurges on a range of consumer goods.

�The cars are yet to finish the homologation. But they will be on the road around the festival season. We have finished homologation of some other models like the S320 CDI and the S 500 and others. These are the higher priced cars in the range of Rs 40 lakh-52 lakh. These cars cost a mint. Still, we have managed to sell 19 in the very first month. We expect demand to soar during the festival season,� company sources said.

The arriviste always looks for an imported car to announce his entry into the charmed circle. And that�s why carmakers say they are getting a lot of enquiries for their CBU imported models.

�It is a niche market. But we are getting a lot of enquiries for the CBU models. Compared to a few years back, the Indian market now offers more choices in terms of vehicles. But the need for newer designs and the desire to own an exclusive car is pushing the CBU imports in the country,� says B.V.R Subbu, director, marketing and sales, Hyundai Motor India Limited.

Hyundai is planning to introduce the Terracan�the offroader from its stable�in June. The model will be imported as a completely knocked down (CKD) kit and assembled here. Its also gearing up for the festival season with a range of imported models like the Getz, Elantra, Tuscani and the Grandeur XG.

�The FIPB application for these cars have not been cleared yet. There have been good enquiries, but it will take some time to bring these cars here. We expect to have them on the road by Diwali,� official sources said.

Toyota Kirloskar and Skoda are also planning to take the wraps off some of the models. Skoda, the Czech automaker will bring in its sole offering Superb as a CBU during the pujas. �If the demand is good, we could import a few Lauren-Klement�the luxury car from the Skoda stable,� said Bipin Datar, sales and marketing head from Skoda India.

Kashyap Motors, the auto dealer, is planning to launch the Volkswagen Beetle during the festival season. �Although the time has largely been fixed because of the homologation process, the festivals are a more auspicious time to bring in the cars,� said Sanjeev Hazari, manager sales.

Toyota�s Prado and Camry will hit the roads around the same time.

�The response to the Prado has been overwhelming. At present, it is being brought in through restricted channels and is always booked before delivery. We hope to make a good sale out of the vehicle. Priced at around Rs 20 lakh, the sports utility vehicle it will have a good number of takers if the enquiries are anything to go by,� said sources from Toyota Kirloskar Motors.


New Delhi, May 17: 
Air-India is making a fresh bid to get convenient time slots at Heathrow airport.

Union minister for civil aviation Syed Shahnawaz Hussain today said an approach has been made at the highest level of the two governments for granting convenient time slots at London�s premier airport to Air-India.

Hinting at Virgin Airways� demand for more rights to fly to India, he said if any of the British carriers wanted to operate more flights here, �We should get suitable slots in the UK�.

Addressing Assocham�s national convention here today, Hussain said Air-India would resume its direct Frankfurt and Chicago flights within two months.

A-I currently operates the Frankfurt flights as code-sharing agreements with other airlines. The move, which will signal a firmer footing for Air-India in Europe, is considered a big step by the travel trade. Hussain added that India�s flagship carrier has come back into the black and is likely to post a profit of some Rs 30 crore.

He said the government, which is continuing with the �Open sky� policy since April, will finalise bilateral air traffic agreements with several countries in the next few months.

However, he pointed out that over two crore seats, under already signed bilaterals, remained unutilised compared with about 1.5 crore being used by foreign airlines. �While signing the bilaterals, we will definitely keep in mind the interests of our national carriers,� he said.

The minister also announced that privatisation of the four major metropolitan airports including Calcutta will be finalised by the end of the year.

He said the department would soon organise a roadshow abroad to invite bids. Hussain said his ministry was negotiating bilateral pacts with many airlines.

For instance, talks are on with Sri Lankan Airlines to start flights to Gaya. The declaration of Bodh Gaya as an international airport will help such arrangements.

He said special attention was being paid to the north-east sector and it had improved as indicated by the recent introduction of the Guwahati-Bangkok flight.

Hussain said his ministry was developing greater synergy with the tourism ministry. He will soon lead a delegation of top officials from the tourism ministry and representatives from the private sector to Dubai, to sell India as an alternative destination to the US to Gulf tourists.

Hussain said that after September 11, the shortfall in the availability of seats touched 17,000 per week. This was largely the result of the economic crises faced by airlines like United Airlines, Qantas and so on. Today, due to many bilateral negotiations, the shortfall has declined to 5,000 seats per week.

Hussain also appealed to the states to reconsider the sales tax on aviation turbine fuel, which is as high as 22 per cent in Delhi. Delhi tourism minister Ajay Maken promised to look into this matter.


Calcutta, May 17: 
Baskin Robbins has come up with new ways to beat the heat this summer. The ice-cream company plans to introduce ice-cream cakes and beverages in the country and will focus on restructuring its activities and providing a store-of-the-future (SOTF) look to its ice-cream parlours.

Baskin Robbins is a 60:40 joint venture between the UK-based Allied Domec Group and Ghai Group under the name of Maharashtra Dairy Products.

�We will introduce ice-cream cake in the Indian market in June and beverages in September,� says Pankaj Chaturvedi, chief executive officer. �We have already tied-up with Barista and Air Sahara to provide an outlet for our special flavours. We expect almost 20 per cent of our revenues this year from institutional marketing.�

The company expects to double its retail sales from Rs 17 crore in 2001-02 to Rs 34 crore by 2003-end.

Speaking on the restructuring exercise undertaken by the company, chief executive officer Pankaj Chaturvedi says, �The store model for the parlours was not right. Secondly, the pricing did not provide the consumer with a value for money feeling. Thirdly, the Baskin Robbins expanded horizontally in smaller markets that did not have premium customers at whom the product was aimed.�

Chaturvedi says that since the last five months, Baskin Robbins has made efforts to take corrective action to rebuild the image of the company.

�The very first step was to create a team with a background in the food business. Secondly, we rationalised the pricing of our products. The prices of scoops were increased by 10 per cent, while the prices of sundaes was reduced by 20 per cent,� he said.

Chaturvedi says the most important change was introduced in the store model, where the franchisee was not allowed to invest more than 10 per cent of the total expected revenue from the parlour. �The idea was to make the franchisee profitable,� adds Chaturvedi.

The company has already closed down 50 parlours over two years. �We expect to have 150 parlours by the year-end, 75 of which will follow the SOTF look,� says Chaturvedi.



Foreign Exchange

US $1	Rs. 49.02	HK $1	Rs.  6.20*
UK �1	Rs. 71.38	SW Fr 1	Rs. 30.30*
Euro	Rs. 44.84	Sing $1	Rs. 26.95*
Yen 100	Rs. 38.74	Aus $1	Rs. 26.55*
*SBI TC buying rates; others are forex market closing rates


Calcutta		Bombay

Gold Std (10gm)	  NA	Gold Std (10 gm)Rs. 5160
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