Daily Excelsior...Business

Disinvestment approach

NEW DELHI, Nov 12: Disinvestment Commission chairman G.V. Ramakrishna has said a comprehensive approach should be followed for disinvesting Public Sector Units (PSUs) through the setting up of a National Shareholding Trust (NST).

He said in Blue Chip PSUs in which the Government’s holding is less than 70 per cent, the Government’s share should be transferred to the NST for further disinvestment shareholders.

In Blue Chip PSUs in which the Government’s holding in above 70 per cent, there should be offer of sale by book building in global depository receipts and domestic markets on the advice of disinvestment Commission to bring down the Government’s holding to 70 per cent. There could be a subsequent transfer to the NST.

For PSUs in non-core sectors, the Government should exit and bring in new ownership and management through strategic sale as recommended by the Commission.

The loss making, PSUs should be closed down after providing adequate compensation of workforce. There should be no disinvestment in PSUs with 100 per cent Government ownership (strategic units), said Mr Ramakrishna.

He was addressing a seminar on "capital market and disinvestment" organised here yesterday by the PHD Chamber of Commerce and Industry (PHDCCI). Mr Ramakrishna said the NST should be incorporated under section 25 of the Companies Act 1956. Its board could comprise of chairmen of the Industrial Development Bank of India (IDBI), the State Bank of India (SBI) and the Life Insurance Corporation (LIC) besides Disinvestment Commission chairman, eminent management experts, the finance secretary and two chief executive officers of converted PSUs (by rotation).

In the first round, he said, 15 to 20 per cent holding should sold be to institutions at a discount (say 20 per cent) on the prevailing market price and the proceeds transferred to Government.

Institutions must further disinvest their holding to the Indian public with in six months to one year. Later, the remaining holding should be divested in favour of institutions at market prices while retaining 26 per cent.

Mr Ramakrishna said there should be an agreement between the NST and the institution for share in the profit on subsequent sale of shares and other matters. The NST would later transfer its share of profit on the sale of shares to the Government.

The Disinvestment Commission chairman said the NST must deal with professionally managed and widely held companies as a major shareholder through board of directors, corporate governance, audit committees besides internal checks and balances.

A speedy programme of PSU disinvestment has to be addressed by the Government on a priority basis as the initiative would not only enhance enterprise value and maximise government capital receipts but would also have impact on the Indian economy by reviving the capital market, he said.

"There is an urgent need to revive the capital market and mobilise large funds for speedy industrial growth to face the global competitive challenges," Mr Ramakrishna said.

The PSU disinvestments will also stop dis-savings in the public sector, improve efficiency and accountability besides reducing the Government’s debt burden, he said.

Mr Ramakrishna said the disinvestment process has been very helpful internationally for encouraging economic growth. Therefore, the objective of disinvestment programme should be for strengthening of management and reducing bureaucratic procedures. (UNI)

LML setting up 2-wheeler retail finance company

NEW DELHI, Nov 12: The Kanpur-based two-wheeler major LML Limited is setting up a finance company for retail financing of its two-wheeler models, a senior company official said.

The company is already in talks with around five financial institutions in this regard and would finalise the partner shortly, LML Executive Director (marketing) R K Caprihan told newspersons here last night.

"We will be shortlisting about three companies by next month. Under the talks, we are looking at both equity participation and general tie-ups," he added.

Besides helping finance LML vehicles, the venture would also be providing bridge loans to LML dealers. "Initially, we are looking at financing sale of our new vehicles. Later, as when we have exchange schemes, we would also use the venture to finance the sale of the second hand vehicles which we get in exchange of our new models."

The finance company, he said, would be in place and operational before the launch of the company’s new mobikes, which are due to roll out in the second quarter of next year.

Meanwhile, unveiling the bikes, Mr Caprihan said all the four bikes, carrying a price tag ranging between Rs 37,500 and Rs 45,000 ex-showroom (Delhi), would be marketed under the LML brand name. The bikes have been produced under a technical collaboration with Daelim Motor Company of Korea.

The new motorcycles will all be in the four stroke category and will have an engine capacity between 100cc and 135cc. The multi-valve engines would develop between 9.5 bhp and 12 bhp.

Some of the bikes would be fitted with standard electric start apart from disc brakes. They would all sport a five speed gear box.

Incidentally, two of the four bikes which were displayed at the conference refused to start with the electric start and had to be kick-started. The company officials stated that as the bikes were not in regular use, the batteries were down resulting in the "minor" starting problem.

In the first phase, the company would be producing 10,000 motorcycles per month in a total capacity of six lakh vehicles.

Talking about the tie-up, Mr Caprihan said, "it is purely technical and there are no plans as yet for divesting equity in favour of the Korean partner."

However, he evaded questions on how does the company intend to address the needs of the rural market with the bikes and whether there were plans to hive off the bike making division into a separate business unit. (UNI)

NABARD sanctions Rs 4.113 lakh to Punjab Govt

CHANDIGARH, Nov 12: The National Bank for Agriculture and Rural Development (NABARD) has sanctioned a loan of Rs 4,113 lakh to the Government of Punjab from out of its Rural Infrastructure Development Fund (RIDF) for development of drainage system and strengthening of roads and bridges in the state.

A NABARD release here yesterday said that the roads project sanctioned, envisages re-construction and strengthening of 24 rural roads and construction of six bridges in Faridkot, Moga and Muktsar districts at a total cost of Rs 2359 lakh.

The NABARD will provide Rs 2123 lakh for these projects, it added. A total road length of a 183.56 km would be developed. The communique said while creating employment opportunities of 10.80 lakh mandays, the project was to be completed by March 31, 2000.

The drainage project sanctioned would cover Wahabwala drain in Faridkot, Muktsar and Ferozepur districts at a total cost of Rs 2937 lakh. NABARD has agreed to provide Rs 1990 lakh for the drainage project. The highlight of the project is the construction of an aquaduct at a total cost Rs 800 lakh across the Rajasthan and Sirhind feeder canals.

The project on completion would benefit a huge area of 16575 hectares and solve the water logging problem in the area while enhancing of ecological balance and agricultural productivity, the release said. (UNI)

Centre plans hydro electric project on Cauvery

CHENNAI, Nov 12: The Centre plans to build an 860 MW hydel power project across the Cauvery river at Hogenakkal to help Tamil Nadu tide over the demand, Union Power Minister Rangarajan Kumaramangalam said today.

Hydel projects were the ideal source to fall back on during temporary shortages, when peak demand far outstripped production, the Minister said while inaugurating a conference on policy framework for power sector organised here by the Confederation of Indian Industry (CII) today.

The Union Government was more than committed’ to develop hydel power projects in the country and increase their share in overall capacity to 40 per cent from the current level of 25 per cent, he said.

Kumaramangalam pointed out that he was heading a task force on hydro electric power development within the Power Ministry, Just to demonstrate the seriousness of the Centre on the issue.’

The Cauvery hydel would be part of the Centre’s plans to add 6,000 MW capacity in Tamil Nadu, which would help the State become surplus in power by 2007, the Minister added.

The other projects proposed in Tamil Nadu were the 2500 MW thermal station at Cheyyar by the National Thermal Power Corporation (NTPC) and the 2000 MW third minecut project at Neyveli, a joint venture of NTPC and Neyveli Lignite Corporation. (PTI)

Govt considering revival package for economy: Sinha

NEW DELHI, Nov 12: Finance Minister Yashwant Sinha today said Government was considering a package for reviving specific sectors and the economy as a whole.

We have not taken any decision on excise concessions for certain sectors of the economy but we are looking at a package of measures for specific sectors and the economy, Sinha told reporters on the sidelines of global Indian entrepreneurs conference being held here.

The Finance Minister also said Government may disinvest in more than four Public Sector Undertakings (PSUs) in the current financial year.

Four PSUs - Container Corporation of India (CONCOR), Gas Authority of India (GAIL), Videsh Sanchar Nigam (VSNL) and Indian Oil Corporation (IOC) - are definitely being disinvested within this year. There may be many more coming in the current fiscal, he said.

Asked about the continued poor performance in industrial production, which recorded a paltry 1.4 per cent growth in September compared to last year, he said performance in October will be better than September.

Pointing out that he had never claimed that the economy would revive in September, Sinha said all he had said was that the revival would take place after September.

The Finance Minister said the growth target for the ninth plan was scaled down from seven per cent to 6.5 per cent because of the poor performance in the first two years of the plan period.

‘Earliing the session on Indian diaspora and promotion of investment flows’, Sinha said the Government was committed to take all possible measures to make the partnership between India and overseas Indians fruitful.

Listing the policy inititatives taken to attract Non-Resident Indian (NRI) investments into the country, he said the Government was committed to increase the coverage of automatic approval route and reduce its own role in foreign investment.

There was need for streamlining procedures with greater emphasis on implementation, he said.

Inviting Indian diaspora to invest in infrastructure and core sectors, Sinha said the Government was opening up more sectors like coal and lignite for foreign investment.

He said the multilateral agencies have started to speak in a language which is very similar to India’s after the country managed to stay out of the currency turmoil in South East Asia.

Participating in the discussion S P Hindujan Chairman of Hinduja Group, said an estimated 40-50 billion US dollars would flow into India as investments if the Government take steps to identify projects and give clearances immediately. Stating that faster implementation was the key to flow offunds from abroad, Hinduja said foreign investors and financial instituions in developed countries were keen toinvest in India but were apprehensive about implementation.

Hinduja suggested representation for overseas Indians inadvisory bodies of industry and economy and restructuring andempowerment of NRI commission.

He also demanded that the permissible limit for overseas equity investments in banking and insurance should be raised from 40 per cent to 49 per cent.

Emphasising on the vast potential of Indian diaspora, Hinduja said if each of the 18 million Indian invests 100 US dollars in India, that alone would work out to 18 billion US dollars.

L N Mittal, chairman of Ispat International said the continuing large fiscal deficit was a worry as it would lead to fairly significant lng-trm inflation, which would pre-empt best use of investments in areas like infrastructure.

Mittal said in his numerous acquisitions abroad he did not have to meet a single minister for finance or industry, adding that there was considerable overlap between roles of politicians, bureaucrats and industry in India.

Subash Chandra, chairman of Essel Industries said Indian regulators have grown to monstrous proportions that they are scaring investors, including foreign investors.

He said resounding success of Resurgent Indian Bonds (RIBs) have proved that credit rating agencies cannot distort investor’s decisions to invest in India. (PTI)

Rupee weakens against dollar

MUMBAI, Nov 12: The rupee weakened against the dollar on fresh demand for the U.S. currency from corporates, led by heavy spot-dollar purchases by a large state-run bank in fairly hectic trade at the interbank foreign exchange (forex) market here today.

The Indian unit closed at Rs.42.33/34 per dollar, a sharp six paise gain from the overnight finish of Rs.42.27/28 after dipping to an intraday low of Rs.42.34/36 on good dollar demand from the State Bank of India (SBI). The rupee had opened higher at Rs.42.29/30.

The rupee had come under pressure in early trade as SBI bought dollars heavily between Rs.42.29 and Rs.42.3050 and pushed the rupee down to an intraday low of Rs.42.34/36. SBI then withdrew from the market with the result the rupee rallied to 42.31/32, but a late bout of spot-dollar purchases by the SBI again pushed the rupee down to Rs.42.33/34, dealers said.

"SBI was actively bidding the greenback throughout the day. It made two forays in the market - first in early business and later at the fag end of the day and put the rupee under renewed pressure", a forex dealer commented.

SBI normally buys dollars for its clients, mainly oil majors and large state-owned companies.

Meanwhile, the Reserve Bank of India (RBI) posted the official quotes for the opening as Rs.42.275/29, highest as Rs.42.27/28, lowest as Rs.42.34/36.

The U.S. currency traded in a broad range of Rs.42.2900 and Rs.42.3500 per dollar and the pound sterling between Rs.70.0500 and Rs.70.2500 per pound.

The rupee continued to steadily firm up against the pound sterling in slow business. Opening around Rs.70.21/23 per pound barely changed from the overnight finish of Rs.70.19/21, the rupee later strengthened at the close.

The futures market was quiet and forward dollar premiums little changed from Wednesday’s levels. Mild interbank play pushed up premiums of far forwards.

The benchmark six-month forward dollar premium to be delivered at the end of April ended around 139-136 paise from overnight closing levels of 140-135 paise.

Cash/tomorrow was done around 1/2 and 1/4 paisa premium and cash/spot at differences of 1-1/2 and one paise premium.

Monthly from dollar premium (in paise) were spot/Nov 8-6, spot/Dec 25-21, spot/Jan 50-47, spot/Feb 76-73, spot/Mch 109-106, spot/May 170-167, spot/Jne 201-197, spot/Jly 230-226, spot/Aug 258-254, spot/Sep 288-284 and spot/Oct 318-313. (PTI)

Daewoo, GM working on joint initiatives

NEW DELHI, Nov 12: Daewoo Motor Corporation of South Korea and United States-based General Motor Corporation are looking at joint initiatives for India in the form of co-branded components, spares and even models at a later stage, a top company official said.

"We are together working on a lot of joint efforts for the global market and India figures in the list of companies in which joint efforts would be made in the automobile industry," Mr Tae-Gou Kim, chairman of Daewoo Corporation’s automotive business, told newspersons here today.

In India, the companies are looking at various possibilities. Initially, the focus would be on sharing of components and parts, which would later be extended to even models.

India, he said, has not been excluded from the list of countries where both the auto giants would work together. "But details on the same are being worked out at present. Discussions are on between GM and Daewoo."

"Though in the immediate future, no joint models have been lined up for India, but later this might be one of the areas of cooperation for the Indian market," Mr Kim added.

On the nature of tie-up between Daewoo and GM, Mr Kim said, the details and modalities of the tie-up are presently being worked out in Korea and the companies would together try to address the needs of the global automobile market.

India, he said, is one of the strategic investment destinations for Daewoo. Towards this end, the company has already decided to make India an export base for its recently-launched 796cc small car ‘Matiz’.

However, Mr Kim ruled out the possibility of rolling out a Ssangyong model in the Indian market. "They make big luxury cars and jeeps and we would not be producing these vehicles in India."

However, he stated that the vehicles would continue to be imported into India.

Daewoo Motor Corporation has recently bought out Ssangyong Motors, the automotive business of Ssangyong Group, another South Korean conglomerate.

He also ruled out any immediate plans for increased investment into the Indian operations. "We have already invested one billion dollars into our Indian operation and it would remain at this level for the time being."

The Daewoo Group, Mr Kim said, has already pledged an investment of 2.5 billion dollars in India for setting up bases for its various business arms here. The group has already invested one billion dollars in India and another over one billion dollars are coming into the energy sector. The rest is being infused into the consumer electronics sector. (UNI)