Purnendu retreats in HPL tussle
VSNL to bankroll Tata Tele plans
Sensex gives up 96 points on war jitters
Back to the villages for more jobs
Mail mania keeps Indians logged on to the internet
Rating pat for SBI local currency deposits
SAIL loss mounts to Rs 1,707 cr
Thermax twin strategy to drive growth
High-end products to power Hitachi sales
Foreign Exchange, Bullion, Stock Indices

Calcutta, May 28: 
Giving in to intense pressure to solve the Haldia Petrochemicals tangle, The Chatterjee Group (TCG) has agreed to pledge 26 per cent of its proposed 51 per cent stake in the petrochem company to the West Bengal government, meeting a key condition for Indian Oil�s entry into the project.

If the proposal, sent by Purnendu Chatterjee, wins acceptance, it will effectively give Indian Oil complete control over the company even with a 26 per cent stake.

In terms set for its equity participation, IOC said it would invest Rs 468 crore in Haldia Petrochemicals in return for management control. It wanted the stakes of other promoters, including TCG�s, capped at 25 per cent. In addition to the money it will pay for the equity, it has offered Rs 500 crore worth of naphtha credit.

�Chatterjee sent us the proposal last week. We are seeking legal opinion on the term pledging of shares. We will send a counter-proposal to the state government in a day or two,� senior IOC officials told The Telegraph.

Chatterjee had winced at the idea of giving IOC management control with a 26 per cent stake, but piped down after failing to rustle up additional equity as the majority shareholder in Bengal�s showpiece project.

The plan for his stake dilution and IOC�s entry will play out like this. Tatas will first transfer their stake to the Bengal government, which, in turn, will give some of it to Chatterjee as part of an agreement signed on January 12 to hand over 51 per cent in Haldia Petrochem to TCG. Later, Chatterjee will pledge 26 per cent with the government and hold voting rights for 25 per cent only.

When it sends its counter-proposal to the state government, IOC would want to know the price at which share transfers between the Tatas, the state government and TCG are planned.

�This has not been mentioned in the revised proposal that has been sent to us by Chatterjee. We would like to know the valuation of the shares. This will enable us to make our investment in Haldia Petrochemicals more transparent,� the officials said.

The Bengal government, eager to get IOC, entered into an MoU with Chatterjee to hand him a 51 per cent stake, but the financial funk at HPL deepened because the TCG chief failed to bring in the additional equity.

IOC officials said that they would also send a copy of the counter-proposal to Industrial Development Bank of India, HPL�s lead financial institution (FI).

The state-run petroleum major is keen to get FIs, which have sunk Rs 4,200 crore in the project, as equity-holders by converting some of their loans into equity.

At present, HPL�s paid-up capital stands at Rs 1,260 crore, of which the state government and TCG hold 43 per cent each; the remaining 14 per cent is with the Tatas.


Mumbai, May 28: 
With the Tatas at the helm, the board of Videsh Sanchar Nigam (VSNL) today decided to invest Rs 1,200 crore in Tata Teleservices Limited, the basic telephony arm of the Rs 47,000-crore Tata group.

However, the government is miffed at the decision of the VSNL board. It claims it was not consulted before the plan was announced, and may recall its directors.

�The strategic investment will be in line with the company�s initiative to reach out to the end customers,� the company said in a formal statement here today.

VSNL managing director S.K. Gupta said long-term plans have been drawn up to add value to investors, who have reposed faith in the company. �It also has the inherent strengths borne out of strong cash reserves, to invest in many of its projects, without having to borrow from the market,� Gupta added.

VSNL officials said the decision to invest Rs 1,200 crore in Tata Teleservices is merely a formal nod, and the period over which the funds will be poured in has not been laid out. �We are in the middle segment of offering international long distance services and our effort is to attain critical mass and complete the value chain.�

Tata Teleservices, with full-fledged operations in Andhra Pradesh, plans to roll out services in Maharashtra, Gujarat, Karnataka, Tamil Nadu and Delhi. Over a period of time, the company will service six major states. Currently, investments in the company are being made by Tata Sons and Tata Power.

Today�s announcement makes VSNL the third investor in Tata Teleservices at a time when the basic operator requires massive funds to roll out its services and extend its footprint to other states and in Andhra Pradesh.

The government holds 26 per cent in VSNL, while the Tatas have raised their stake to 45 per cent after the recent open offer. �The Tatas� acquisition of VSNL further strengthens the group�s presence as a holistic player in the telecom industry. This year, we will focus on the integration of VSNL into the group�s telecom ventures for synergies that benefit customers and us,� Gupta said.

The announcement about the investment in Tata Teleservices came on a day VSNL unveiled a 11 per cent fall in 2001-02 revenues at Rs 7,111.8 crore. Net profit slipped 20.87 per cent to Rs 1,407.4 crore from Rs 1,778.8 crore.

A 125 per cent dividend, to be paid out of profits, has been declared, in addition to the 750 per cent dividend announced before the government divested 25 per cent in VSNL. The total this year adds up to 875 per cent.

For the Tatas, the 125 per cent dividend will mean that part of its cost of Rs 202 per share will be recovered when it receives Rs 12.50 per share as dividend, making it a handsome return on its investment.

The leading international telephony and ISP, which changed from being a public sector undertaking to a Tata group company during the year, blamed falling rates and a sharp reduction in tariffs for lower profits and sales.

Its internet subscriber base grew 11 per cent from last year�s 5.29 lakh to 5.87 lakh in March this year.

The company carried 3.1 million minutes of international calls in 2001-02, representing a growth of 16 per cent.

The board recommended a dividend payout of Rs 87.50 (rupees eighty seven and fifty paise only) per share, which is inclusive of special interim dividend of Rs 75 per share paid out of the reserves of the company as per the approval obtained from the central government and Rs 12.50 per share out of the profits of this year.

�Our performance assumes great importance as VSNL has been able to achieve considerable growth in spite of significant reduction in settlement rates, increasing competition and substantial decline in tariffs in respect of its value added services during the year,� Gupta said.


Mumbai, May 28: 
The markets were spooked by rumblings of war yet again as President Pervez Musharraf did little to address the concerns on terrorism in the televised address to his nation on Monday.

The Bombay Stock Exchange (BSE) sensex shed 96 points to close at 3146.83 in a session where the bears crawled out of the woodwork to dump shares before India�s response was known. Market watchers said the Pakistan president�s comments had upset investors who had been hoping that his speech would do a lot to cool an explosive border.

Operators showed a reluctance to enter into fresh deals as uncertainty over the Centre�s response mounted. After that came through, opinions were divided on how things would play out in the next few days.

Some said the tensions between the two nations would persist, others felt that statements given by Jaswant Singh showed a more �mature� response from India. �This should help avoid any dramatic declines on Wednesday, though the market will be glued to the situation unfolding on the border,� an analyst said.

Though Singh sad Musharraf�s belligerent posture has stoked the hostility between the two nations instead of reducing it, market observers were comforted by the government�s statement that it would not be the first to use nuclear weapons, and that diplomatic ties between the two nations would continue.

The Centre�s reaction came in after the market had closed. Twenty nine of the 30 scrips in the index ended in negative territory. Some of the heavyweights that took a pounding were Reliance, Infosys, Hind Lever, HPCL, ITC and Satyam Computers

Rupee steady

The rupee ended steady at 48.98 against the dollar, though it did plumb an intra-day low of 49.01 because of fears over Musharraf�s statements. Dealers said continuous dollar supplies from nationalised banks and thin demand for the greenback helped keep the currency stable.


New Delhi, May 28: 
A Planning Commission special group on employment today criticised an earlier assessment made by a task force headed by Montek Singh Ahluwalia, and said the unorganised and farm sectors must be rejuvenated to create 50 million jobs during the Tenth Five-Year Plan.

The report was opposed to several aspects of policy and methodology suggested by the Montek Singh Ahluwalia committee on the same subject, chief being the potential of agriculture to generate employment. While the group, headed by Planning Commission member S.P. Gupta maintains that agriculture has tremendous potential to generate employment, the task force had said that the sector�s future job potential was near zero.

Blaming lack of priority in the 90�s reform process for �no growth in agricultural employment between 1993-94 and 1999-2000�, the special group said agriculture still had a high potential for contributing to employment if proper restructuring and deregulation were initiated in this sector.

The Gupta panel says nearly 20 million jobs could be created in agriculture and allied sectors, agro-forestry, energy plantation, rural sectors, education, health and family welfare, it said, adding the unemployment rate can be reduced by nearly half over the Tenth Plan period.

Further, it said the goal of creating 10 million job opportunities per annum over the Tenth Plan can be met by encouraging the use of labour-intensive and capital saving technology.

Unveiling the report, Planning Commission chairman K.C. Pant said the present report concentrated on micro aspects of increasing labour intensities in various sectors, unlike the task force, which went into macro economic policy reforms.

�The Planning Commission will consider both reports and its final view will find reflection in the Tenth Five-Year Plan document,� he said.

Pant said the strategy of employment creation through the 8 per cent growth process, as recommended by the Ahluwalia task force, is likely to take time and hence should be seen as a medium term solution. �It needs to be complemented by short term strategies,� he said, adding that the special group has dealt with this aspect to deliver results within the Tenth Plan�.

The special group said the definition of employment used by the task force �underestimated the Plan�s task in generating new employment� and a large proportion of unemployment and underemployment could not match the concept behind the target of creating 10 million jobs a year. In its deliberations, the task force had not paid adequate attention to the issue of the large backlog of underemployment as reflected by the current daily status data.

Stating that the unorganised sector contributes 92 per cent to employment, the Gupta panel favoured diversification of agriculture, wasteland development, watershed programmes and removal of restrictions on management of farm products.

It presented a policy package for creation of gainful employment in agriculture, food processing, small and medium enterprises, khadi and village industries, education and information technology sectors.

Gupta also favoured setting up of a skill development fund (SDF) on partnership between industry and the government, with a major voluntary contribution coming from industry.

Further, while the earlier task force recommended lowering of import tariffs, the special group feels that though this may help employment generation, encouraging increase in exports can, in specific cases, adversely affect employment among certain domestic industries in the near future by larger competition from imports.

The task force had also recommended dereservation of SSI within four years and increase in the FDI investment.


New Delhi, May 28: 
Internet evangelists who thought the web would spark a revolution in commerce do not have to much to show in India, where the Net is more of a communication channel rather than the information highway for a zooming business.

A survey by Gartner India says the number of those who used internet grew 27 per cent in two years � but most logged on to send and receive e-mails, not to buy and sell. So, e-commerce remains a dream as distant as ever.

Gartner estimates the number of internet users �people who surf for at least an hour every week � at 3.1 million. India has the fifth largest internet base in Asia-Pacific, after China, Korea, Australia, and Taiwan.

E-mail is the primary reason why the Net is such a big draw with teenagers, youth, middle aged, students, housewives, retired persons and professionals in India. The other important motivation is gleaning information.

A recent IDC survey shows the majority of working men over 36 trawled the Web for facts and figures.

�The trend is fast catching on with more and more students/professionals seeking information. With deeper PC penetration and falling cost of net connections, even housewives find the right recipes, clothes and interior designs on the net,� said Amitabh Syngal, secretary general, Internet Service Providers� Association of India.

If there are people who hunt for information, it does not change the proportion of e-mail aficionados. A newly wed housewife may look for fashion accessories and good places to eat, while a mother will scoop dope on health. Both will send and receive e-mails, though.

Among the sites frequented by Net users are those where one can download software, find entertainment, get education, chat with friends and relatives. Sites that allow software to be downloaded are the most popular with teenagers, youth, the middle and the aged. Here, it is desktop utility programmes and music files that have been stealing a march over all other services.

The IDC survey said students between 12 and 18 download software two to three times a week. Housewives/retired persons also do, but could not say how often.

According to Gartner, the fraction of surfers who have done deals on the net (e-transactions) is minuscule � only 2.2 per cent have ventured into B2C e-commerce; a measly 3.6 per cent have placed orders on line.

More than 90 per cent of the respondents said they have never bought anything on the Net. This was true of men and women surfers, working and non-working individuals.

Some said they did not feel �comfortable with this way of shopping�, 26 per cent wanted to touch and feel the products before ordering, while 23.5 per cent said they did not want to reveal their credit card number.

�Purchase of books and lifestyle products on the net will soon become popular, particularly among the women both young and old, housewives and working. This trend will also be reflected among those who frequent the world-wide web several times in a day,� said N. Bhaskar Rao, chairman Centre for Media studies and Marketing and Development Research Associates.

The survey found books were the item most purchased by Indian Netizens. This was followed by audio and CD music. Teenagers and youth were more enthusiastic in buying on line than the middle and aged.


Mumbai, May 28: 
Moody�s Investors Services, the leading international rating agency, has upgraded the long and short-term local currency deposit ratings of State Bank of India (SBI) from Ba1/Not-Prime to A3/Prime-2.

Moody�s stated that the revised local currency deposit ratings incorporate the bank�s inherent financial strength, its competent management as well as some asset quality concerns.

It pointed out that the country�s largest bank�s D+ financial strength rating (FSR) is the highest outstanding rating among Indian rated banks, and reflects the bank�s dominant market position as well as good liquidity levels, improving profitability and adequate capitalisation. However, it pointed out that the bank�s FSR is constrained by the high level of credit risk in the Indian operating environment.

The leading agency said that it regarded SBI as �too big to fail,� adding that it was inconceivable that any government would allow SBI, the biggest public sector bank in the country, to default on its local currency obligations to its retail depositors. �Such a scenario could cause the collapse of the banking system and turmoil in the Indian financial system,� it pointed out.

Moody�s also said that the ratings address the probability that SBI�s ability to repay its local currency depositors would be affected by a possible default/rescheduling of the government�s debt. �In such a scenario, Moody�s believes that the bank would be likely to be able to meet its obligations from its own resources, but if it were to experience any difficulty, the Reserve Bank of India (RBI) would make funds available.�


Calcutta, May 28: 
The turnaround dream of Steel Authority of India Ltd (SAIL) has been shattered with the ailing public sector steel company suffering a whopping loss of Rs 1,707 crore for the year ended March 31 compared with previous year�s loss of Rs 729 crore.

What is of more concern is that the loss has jumped to this level despite SAIL selling its power units and earning over Rs 200 crore by leasing out idle assets, including quarters in the townships of four integrated plants at Durgapur, Bokaro, Rourkela and Bhilai, sources said.

The company�s turnover in the last financial year stood at Rs 16,000 crore.

SAIL has attributed the drop of 8 per cent in sales realisation as the main reason for this dismal performance.

�The unprecedented low sales realisations were a direct consequence of surplus supply conditions, at home and abroad,� a SAIL press release said.

The company has, however, succeeded in increasing its total sales to 9.255 million tonnes, recording a growth of 5.7 per cent over the previous year and enabling SAIL to record an operating profit of Rs 1,101 crore.

SAIL�s stocks have been reduced substantially during the last financial year to be valued at Rs 422 crore.

The company had to bear capital related charges of Rs 2,718 crore during the year which is Rs 178 crore lower than the charges in the previous year.

Industry watchers said SAIL�s net worth would be eroded by over 50 per cent, forcing the company to make a compulsory referral to the Board for Industrial and Financial Restructuring (BIFR).

SAIL�s accumulated losses following the government�s approval to its business and financial restructuring three years ago have mounted to over Rs 2,900 crore while its paid-up capital is Rs 4,130 crore

The company hopes to turn the corner during the current financial year as the steel market is looking up and so is price realisation. SAIL has already increased its market share in some of its products during the first two months.

Senior SAIL officials, while accusing the poor market conditions for this dismal performance, said the failure in successfully implementing the divestment programme has added to the crisis.

�The company�s plan to hive off Salem and Alloy Steel Plant could not fructify due to intense political pressure. This has throttled not only the company�s future course of action but also led to heavy overhead costs on account of salary and wages,� a senior SAIL official said.

George Williamson

George Williamson (Assam) Ltd, the tea company controlled by the Magors of England, has posted a net profit of Rs 7.72 crore in the financial year ended March 31, 2002.

The company�s net profit was over 50 per cent lower than the previous year. Its total income of Rs 183.27 crore fell by about 7.5 per cent. The fall in income was largely due to the fall in income from tea.

Income from its tea business at Rs 179.21 crore was Rs 12.27 crore�or 6.4 per cent�lower than the previous year. George Williamson�s earning per share for the year was Rs 5.45�about half of the previous year�s Rs 11.


Calcutta, May 28: 
The Pune-based Thermax Ltd has adopted a dual strategy to drive growth in the domestic and international markets.

Chairperson Anu Aga says, �The company has drawn up a two-fold strategy to boost bottomline growth. First, we will introduce our new business model of providing integrated solutions for the industry. The second step will be to expand market share both in the domestic and international markets.�

The energy and environment management firm has also decided to redesign its dealer network to expand its reach in the interior regions in the country. Thermax�s network of 232 dealers will be restructured and trimmed to enable the company present a one-stop counter for integrated solutions, starting with production to recycling of waste materials and energy conservation.

The company has products and solutions in five major categories�boilers and heaters, industrial cooling and air-conditioning, waste solutions, captive power and chemicals.

Thermax had restructured its management in 2000 and identified core business areas that would drive growth. It sold off its non-core businesses in software and electronics and trimmed its workforce.

The performance of the company improved after the restructuring with the chemical and absorption chiller businesses growing significantly.

Elaborating on its growth plans in India, Kulkarni says, �We expect to achieve a 15 to 20 per cent growth by March.�

Thermax has registered an income of Rs 494 crore for 2001-02 as against Rs 504 crore in 2000-01. Net income rose to Rs 24.01 crore, from a loss of Rs 13.22 crore in the previous fiscal. The company is already working on 11 new products, which are now being tested in the Maharashtra and Tamil Nadu markets. The products will be launched in October this year.

Speaking on the company�s export plans, managing director Prakash Kulkarni says, �We will focus on capturing a larger share of the export market. This year, the focus will be on the US, Europe, south east Asia and Russia.�


Calcutta, May 28: 
Amtrex Hitachi Appliances (AHA) will focus on high-end products to push sales growth.

�We are strengthening our commercial category with the introduction of high-end products. We have already introduced the Hitachi SET-free systems, screw chillers and multi-split air conditioning systems,� managing director Naisadh Parikh said.

The commercial and household segments contribute equally to the company�s turnover. However, the household segment is expected to see a growth of more than 30 per cent during 2002-03. In contrast, the commercial segment is expected to grow 15 per cent this year as against a flat growth last year. The household sector saw a growth of around 17 per cent last year.

Amtrex Hitachi today launched the MicroCool range microprocessor-based commercial air conditioners in the country. The product is targeted at small and medium offices and commercial establishments, with requirements ranging from 20 tonnes to 500 tonnes.

The Rs 370-crore joint venture between the Lalbhai Group and Japan-based Hitachi has identified India as a major market for its products and is aggressively working to capture a larger market share by introducing technologically superior products.

�The household segment will drive growth in the industry. We expect to expand our market share in this category to be 18 per cent this year as against the present 14 per cent,� says Parikh. �In the commercial segment, Hitachi presently enjoys a market share of 22 per cent. This is expected to grow to about 15 per cent with the introduction of new products in the category.�

Commercial air conditioners account for around 25,000 units sold in the country every year and sales are expected to grow considerably with the economy looking up and infrastructure investments from the IT, tourism and healthcare sectors expected to go up.

AHA has also earmarked an expenditure of Rs 20 crore on promotional activities this year. The company has already launched the mobile van service for household air conditioners in Calcutta, Delhi and Ahmedabad. It also has made call centres operational in 10 major cities across the country to cater to complaints round-the-clock.

Parikh says both these initiatives are the first of its kind from an appliance company and will go a long way in building customer satisfaction and confidence in the product.

AHA has already seen a 51 per cent growth in sales with 15,750 units being sold in April 2002, as against 10,400 units a year ago.

Amtrex Hitachi currently has around 1,000 retail outlets across the country and 200 exclusive sales and service centres. Parikh says that with the rise in usage of air conditioners and increase in penetration, the company will enhance its distribution network to meet the demand.

In India, the penetration of the room AC industry is a mere 3 per cent in major metros and 1 per cent in the smaller towns and cities.



Foreign Exchange

US $1	Rs. 48.98	HK $1	Rs.  6.20*
UK �1	Rs. 71.49	SW Fr 1	Rs. 30.45*
Euro	Rs. 45.34	Sing $1	Rs. 26.90*
Yen 100	Rs. 39.34	Aus $1	Rs. 26.90*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 5470	Gold Std (10 gm)Rs. 5330
Gold 22 carat	Rs. 5165	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 8325	Silver (Kg)	Rs. 8220
Silver portion	Rs. 8425	Silver portion	   NA

Stock Indices

Sensex		3146.83		-96.58
BSE-100		1602.94		-44.66
S&P CNX Nifty	1038.20		-24.50
Calcutta	 112.19		- 2.71
Skindia GDR	 524.48		+ 0.18

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