Idea Cellular nearing financial closure
Mumbai: Idea Cellular, the three-way joint venture between the AV Birla, Tata and AT&T groups, has nearly achieved financial closure, with the company at the finishing line to closing its debt restructuring exercise. Long-term syndicated debt of nearly Rs 2,000 crore, lead arranged by IDBI, has been fully arranged for, with only the formal documentation process pending, officials said. "This would happen any time now." It has taken nearly a year and a half for the syndicated loan to get formalised. IDBI has been lead arranger for the loan, the other participants in the 13 or 14-member syndicate being Life Insurance Corporation, Infrastructure Development Finance Corporation, and a clutch of banks, among them State Bank of India, said institutional sources.

The debt has quickly followed equity infusions which all the three promoters have been making from time to time, and which is almost entirely in place, said officials with the company. The total project cost for Idea Cellular is in the region of Rs 4,500 crore. Two years ago, the cellular combine had announced its intention to restructure its outstanding loans, some of them taken independently by Birla-AT&T and Tata Cellular before their merger. A larger part of the Rs 2,000 crore of syndicated loan will go towards restructuring earlier debts. Idea Cellular operates in the circles of Delhi, Maharashtra (including Goa), Andhra Pradesh, Gujarat, Madhya Pradesh (including Chhattisgarh). It has around 18-lakh customers, around 10 per cent of the all-India base and around 25 per cent of the base in the circles of its operation. The larger players in the Indian telecom industry have reached a stage when they can effect financial closure, said institutional sources.

According to them, their pattern of fund-raising and deployment is
typical for the telecom industry when, during the early stages, because of the staggered nature of rollout required, the companies had been getting by feeding on equity infusions and several short-term debts. "Over a period of time when their project achieves a certain size and maturity, long-term debt is arranged to restructure and to consolidate their debt," said an official with one of the lenders. An illustration of this is the case of BPL Cellular, which despite the financial problems it was known to be facing, and despite its very moderate subscriber-base increase of late, announced its financial closure a few months ago.

"The lenders helped them rejig their business plan; also the institutions felt that the group had a good telecom network, and had generated considerable brand value for itself, not to speak of ground experience," said an institutional source. According to him, there is quite an appetite still among financial institutions and banks for taking on fund raising for telecom companies backed by large corporate houses. It has helped that valuation of telecom companies has shifted over the years, from looking at customer count and Average Revenue Per User (ARPU) to giving more weightage to the debt-equity ratio of the project and increasingly, to EBITDA (earnings before interest, tax, depreciation and amortisation) and EBITDA-to-debt-levels.
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Sify makes Bangalore WiFi-enabled city
Bangalore: If you are one among the laptop-wielding professional on the move and happen to be at certain places in Bangalore, you can now access broadband Internet without being wired. Thanks to Sify, which announced the launch of its WiFi services in Bangalore on Tuesday. Wireless fidelity better known as "WiFi" offers connectivity between computer networks and Internet in an unwired environment.

WiFi allows computers to send and receive data within a specified radius called "hotspots". Sify has WiFi-enabled Bangalore by setting up such 120 hotspots, branded as `Sify Wi-Zone', across the city. These Wi-Zones are spread across locations such as Vidhana Soudha, the IIM Bangalore, hotels such as The Park, The Atria, The Grand Ashoka, the KGA Club House, Casa Picola chain of restaurants, the Java City chain of coffee shops, the iWay Cyber Cafes among others, making Bangalore India's first WiFi-enabled city. George Zacharias, president and COO, Sify, said the company chose Bangalore for launching its WiFi services because of its high laptop population, familiarity with working online as well as international visitors needing such services while moving around the city.

It is estimated that Bangalore has over 15,000 laptop users. "IT professionals and overseas visitors to Bangalore can now enjoy broadband WiFi access at any Sify iWay as well as other hotspots in Bangalore for Re 1 a minute," he said. While Internet access through the traditional dial up costs Rs 30 per hour at cyber cafés, the broadband access costs about Rs 60 per hour at Sify Wi-Zone. It may cost about 2.5 times more that of dialup depending on which Wi-Zone a user chooses to browse from, Sify sources said, adding that speed of broadband access at hotspots is up to 384 kbps whereas the dialup speed is at 56 kbps.

All that a user needs to do is to buy online prepaid cards and use it with WiFi-enabled laptop. "In addition to the current 120 hotspots many more are being rolled out over the next few months, covering hotels, restaurants, commercial buildings, malls and corporate campuses in Bangalore," Zacharias said, adding "the company expects to roll out WiFi services in other cities soon".
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Maruti mulls price hike in December
New Delhi: Maruti Udyog Ltd is likely to raise prices across all its models in December due to spiralling steel costs and the strengthening of the Japanese yen vis-à-vis the dollar. "We would be taking a look at our prices in December-January. Our contracts with the steel companies are coming to an end and we are re-negotiating the prices with our suppliers. Also the yen has become stronger at about 108 yen per dollar now from about 125 last year," Jagdish Khattar, managing director of Maruti Udyog Ltd said.

Maruti currently sources 26 per cent of its raw materials and components and about 35 per cent of its machinery spares from Japan. Concurrently, steel prices have also risen by about 20 per cent in the past few months. Maruti sources steel from South Korea, Japan and domestically from Bhushan Steel. Further,the company on Tuesday said that the strike at its key vendor DCM Engineering's foundry unit ended on Saturday. "The DCM strike has ended and we are hoping that regular supplies will commence within a week," Khattar said.

The strike, which commenced in July this year, had hit Maruti's production and supplies to the export markets. DCM Engineering supplies about 70 per cent of the company's cylinder block requirement. However, though the company's production declined in the April-September 2003 period, its sales have gone up by 26 per cent in the period. "The loss of production did not mean substantial loss of retail sales as there were dealer stocks in the market," Khattar said.

On cost cutting measures, Maruti said its recently operational aluminium foundry in Manesar (Haryana) would result in savings of Rs 60-70 crore annually and it would be expanded further. The foundry, which was established on an investment of Rs 115 crore, produces engine parts and would help in increasing localisation of Maruti models.
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GAIL pays Rs 227.8-cr dividend to Govt
New Delhi: GAIL (India) Limited on Tuesday presented a cheque of Rs 227.8 crore to Government as final dividend for the financial year 2002-03. With this, the company has paid Rs 398.63 crore as the total dividend for fiscal 2002-03, according to an official release. The Government holds 67.34 per cent of the Rs 845.65 crore paid-up capital of the gas transportation major. The company recorded a sales turnover of Rs 11,775 crore and a net profit of Rs 1,639 crore for 2002-03. GAIL has paid total dividend at the rate of 70 per cent. An interim dividend of Rs 170.83 crore was paid in February this year
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Serum plans 2 new vaccines
Pune: The Pune-based Serum Institute of India Ltd (SIIL) is set to hit the domestic market with its two new vaccines, rabies and a combination vaccine of DPT and Hepatitis B. Talking to presspersons, Zavaray Poonawala, managing director of SIIL, said clinical trials and beta testing of both the vaccines had been conducted and the rabies vaccines were scheduled to hit the market by this month-end. The combination vaccine would be made available by the next fiscal year. As with the other vaccines, exported to over 130 countries, these vaccines also would find their way to the global market, he said. Commenting on the other products, he said on the DNA vaccine front, work was on for developing a DNA Rabies vaccine. Also, a novel peptide vaccine for measles was being developed.

Research and Development was on for a vaccine against AIDS. Poonawala, talking about the financials of the company, said it had closed the year 2003 with a turnover of Rs 500 crore and was targeting a 25 per cent growth for the current fiscal. Of this 25 per cent growth, 20 per cent was estimated to come in from exports while the remaining would be from domestic market. Currently, about 75 per cent of the turnover came in from exports. He said the company was also planning to make a foray into the West Europe and the North American markets.
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Skoda may make India a production base
Chennai: Skoda, the Czech-based subsidiary of the German car major, Volkswagen, has taken its first steps towards making India a production base, company sources said. Skoda Auto India assembles `Octavia' cars from premises rented from Siemens in Maharashtra. The company is building a new assembly line in Aurangabad, and has committed to making an investment of $56 million over a seven-year period till 2007. However, over a period of time, Skoda could make India a production base for exports to third countries. When that happens, the company may also source auto components from India, for its other plants worldwide, sources said on Tuesday.Officials from Skoda India were here to acquaint the press with its next offering, the E segment luxury sedan, `Superb'.

Addressing a press conference here, Bipin Datar, general manager, sales and marketing, Skoda Auto India, said that the company would also come out with a diesel version of Superb', which will be priced the same as the petrol model. "There is no reason why a diesel model should be priced higher than a petrol model. I have been asking the competition for an explanation, but I have never got one," Datar said. Meanwhile, the indigenisation programme for Octavia is picking up pace. In a month, Skoda India will have finalised the vendors for items such as horns, headlamps and batteries. The company expects to reach a 70 per cent indigenisation by 2004
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GG Auto Gears net increases to Rs 1.34 cr
Mumbai: GG Automotive Gears Ltd (GGAG), one of the largest suppliers of automotive and transmission gears to Indian Railways, has posted a net profit of Rs 1.34 crore for the quarter ended September 30 against Rs 30 lakh during the corresponding quarter of last fiscal, registering an increase of 353 per cent. The company has also achieved a turnover of Rs 15.21 crore during the quarter compared to Rs 7.80 crore posted during the corresponding quarter of last fiscal.

According to a company release, RITES, the engineering and exporting arm of Indian Railways, will be now marketing GGAG products in African and South-East Asian countries. Recently, General Motors of the US has selected GGAG as a prominent supplier of quality gears and had placed trial orders on the company. The company has put up on its drawing board an expansion programme to almost double its capacity of 18,000 gear box housing to 30,000 gear box housing.
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Indo Rama net up 61%; to pay 10 pc interim
New Delhi: Indo Rama Synthetics (I) Ltd (IRSL) on Tuesday said its net profit has increased by 61 per cent to Rs 43.60 crore during the second quarter of this fiscal against Rs 27.05 crore during the corresponding period of last year. The company also announced an interim dividend of 10 per cent. During July-September 2003, IRSL achieved sales turnover of Rs 672.99 crore against Rs 576.55 crore in second quarter last year, a 17 per cent growth, O.P. Lohia, managing director IRSL, said at a press conference.

The company's cash profit rose 39 per cent to Rs 100 crore from 71.92 crore in the second quarter of last fiscal. "The results of the company in the second quarter confirm the buoyancy in the textile industry. It gives us confidence of a sustained growth in the coming two-three years," Lohia said. IRSL's Operating Profit (Earning Before Interest, Depreciation and Taxes (EBIDTA) increased 26 per cent to Rs 109.46 crore compared with Rs 86.96 crore during the second quarter of last year. After providing for interest and depreciation at Rs 9.41 crore and Rs 25.54 crore respectively, IRSL reported a profit before tax (PBT) of Rs 74.52 crore, higher than Rs 47.82 crore in the corresponding period last year.

For the half year ended September 30, 2003, IRSL reported a 6 per cent increase in sales turnover at Rs 1,148.31 crore against Rs 1,085.53 crore in the corresponding period of last year. Sharing the company's future plans, Lohia said, "Our plans to set up another polyester staple fibre plant at Butibori by first half of 2005 will go as planned." This means increase in production by another 50 per cent, he said, adding that the new plant's capacity will be 140,000 tonnes. The investment involved was close to Rs 375 crore.
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IHCL net rises 31.32%
Mumbai: Improving sentiment in the hospitality sector showed in second quarter results of Indian Hotels Company Ltd (IHCL), disclosed on Tuesday. IHCL reported a 31.32 per cent rise in profit after tax for the second quarter ended September 30, 2003 to Rs 3.48 crore, from the previous corresponding Rs 2.65 crore. Including sales and other operating income of Rs 136.55 crore (Rs 115.86 crore for the year ago period), total income touched Rs 144.21 crore (Rs 126.40 crore).

Profit before exceptional items and tax was higher by 104.13 per cent at Rs 8.41 crore (Rs 4.12 crore). Exceptional items accounted for Rs 2.91 crore, largely VRS outflow, its impact partly offset by reduced interest of Rs 6.06 crore (Rs 9.28 crore). Occupancy level averaged 63 per cent (53 per cent), while room revenues gained by 19 per cent. ARRs, post-June '03, exceeded year ago levels and closed the quarter higher by 9 per cent. In terms of revenue share, rooms fetched 46 per cent (45 per cent) and F&B, 44 per cent (44 per cent). From a SBU perspective, the revenue share of luxury division grew to 80 per cent (72 per cent), business contributed 8 per cent (13 per cent), leisure 7 per cent (6 per cent) and corporate, 7 per cent (4 per cent). Domestic leisure traffic was strong in the first half and going ahead, international leisure traffic is projected to pick up significantly.

For the second half, IHCL expects growth rates to continue with a
combination of occupancy and ARR increases. However, other expenses and pay roll costs will be higher, the latter ascribed to induction of people with international experience. Zubin Dubash, executive director, IHCL, said at a press briefing, the company is implementing a 7-10 per cent rate increase across properties. Direct sales agents are being appointed to increase coverage at no fixed costs, there will be focus on increasing the proportion of negotiated accounts and a sales campaign is planned targeting over 200 corporates in South East Asia.

According to him, IHCL did submit a bid for a suitable property in the US, but success appears almost ruled out given reports of a stronger bid in the fray. No official word to that effect has been received yet, from the seller. Some time back, the company had informed the BSE of its board approving the submission of a non-binding bid for a US property. For the first half, its profit after tax amounted to Rs 7.24 crore (Rs 3.67 crore) on total income of Rs 281.87 crore (Rs 244.17 crore).
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Ranbaxy to take human trials for prostrate drug to UK
New Delhi: With the Government yet to take a call on allowing Phase I clinical trials in India, Ranbaxy looks poised to take the human trial for its investigational new drug (IND) in the benign prostrate hyperplasia (BPH) segment out to the United Kingdom. Pharmaceutical companies operating in India have been urging the Government to allow Phase I clinical trials in India, as it would significantly bring down the cost incurred by the company. "If the norms are not changed, we will have to take the human trials out to the UK.

This is the second time that we would have to do it, the first time being with an anti-bacterial drug, earlier this year," Dr Rashmi Barbhaiya, president - research and development (R&D), Ranbaxy Laboratories Ltd, said. A company files an IND application after it receives favourable results from a molecule identified during the early discovery stage. Once the lead molecule is identified, it moves into the pre-clinical stage, where studies are conducted on animals to determine the activity of the molecule against a targeted disease and subsequently, its safety is evaluated. After the IND application is filed with the regulatory authorities, Phase I clinical trials are conducted, involving tests on around 50-100 healthy human volunteers. It evaluates the safety profile and the safe dosage range.

Meanwhile, on the cost factor, Dr Barbhaiya admitted, "it was a significant drain on the company. A trial that would cost about 6,00,000 pounds would have been only one-tenth the cost, if Ranbaxy could have done it in India."The company is looking to increase its R&D budget to seven per cent of sales, from six per cent in the current year. He said that Ranbaxy expected to match last year's performance in terms of abbreviated new drug applications (ANDA) in the US, Europe and in India.
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BHEL bags Rs 243-cr project in Rajasthan
New Delhi: Bharat Heavy Electricals Ltd (BHEL), the public sector power equipment major, is to set up a lignite-based power project at Giral in Barmer district of Rajasthan. The order for setting up the 125 MW power project, placed on BHEL by Rajasthan Rajya Vidyut Utpadan Nigam Ltd., is valued at Rs 243 crore. The project is to be commissioned within a time schedule of 33 months.

The thermal power plant, according to a BHEL statement here, is to be equipped with a eco-friendly circulating-fluidised-bed-combustion (CFBC) steam generator, specially designed to utilise low-grade fuels such as lignite, high-ash coal, washery rejects and petroleum coke.
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Hero Honda net up 12 pc in Q2
New Delhi: Hero Honda Motors on Tuesday said its net profit grew by 12 per cent to Rs 156.55 crore for the quarter ended September 30, 2003, from Rs 139.84 crore in the same period last year. Net sales went up marginally to Rs 1,261 crore during the July-September quarter from Rs 1,235.90 crore a year ago. Hero Honda sold 4,46,454 motorcycles during the second quarter, a 9.5 per cent rise over the previous year. For the first half of the fiscal, the company's net profit jumped by 12.6 per cent to Rs 314.37 crore from Rs 279 crore in the same period last year.

For the April-September period, motorcycle sales grew by 9 per cent to 9,05,233 units. Brijmohan Lall Munjal, chairman of Hero Honda Motors, said the third quarter looked "very promising" for the company due to good monsoon and the current festival season. The company's Managing Director Mr Pawan Kant Munjal said the launch of new variants of Passion and Splendor motorcycles would help increase sales in the coming months.
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