Long distance call rates likely to be cheaper
New Delhi: The Telecom Regulatory Authority of India (TRAI) has decided to reduce the access deficit charge (ADC) component for long distance calls in the revised interconnection usage charge (IUC) regime that is to be introduced shortly. This could lead to a further reduction in ISD and STD call charges of private basic operators, even as Bharat Sanchar Nigam Ltd (BSNL) suffers a dip in its revenues from interconnection. In an internal note of the TRAI which has been prepared for a meeting to finalise certain aspects of the revised IUC before making them public, it has been stated that "the net ADC amount to be funded by long distance calls is much lower than the amount estimated earlier, and this implies that the long distance calls can now be cheaper because the load imposed by this component would be lower." The ADC as it is levied at present is the difference between the cost incurred by BSNL to provide fixed line services and the amount charged from the subscribers.

Since the rentals and the call charges are below cost, the ADC which is imposed on the private operators, is meant to compensate BSNL for keeping the service affordable and incurring this extra expenditure. This component is incorporated in the overall interconnection charges that the private operators have to pay BSNL for linking up with its network for local, STD and ISD calls made by their subscribers. As a result, any decline in this component will give the private operators that much more flexibility to reduce rates, while BSNL will suffer a corresponding decline in revenues. While the reduction in the ADC on STD calls will have an immediate impact on the rates being offered by the private operators, the impact on ISD rates will take much longer. The TRAI note takes the view that even as the ADC on ISD calls of Rs 5 per minute that is levied at present is high, they will continue to be higher than that imposed on STD calls. "The Authority has decided to reduce ADC component for ILD calls taking account also of the importance of such ADC in meeting tele-density targets.

The Authority also noted that the ILD tariffs have traditionally been high and the ADC component for ILD may be different and higher than that applicable to national long distance calls," the internal paper notes. The reason why any decline will not have an immediate impact on ISD prices is because of the absence of the carrier access code (CAC) whereby a subscriber can choose his or her ILD operator. Since the deficit charge for international calls is levied only on the originating and terminating networks, BSNL continues to corner most of the revenues on this account. Once the CAC regime is in place, and a BSNL customer wants to use the ILD network of a private operator, say Bharti, the calls could cost much lesser, as Bharti will have to pay a lesser interconnection charges and can pass on the benefit to subscribers.
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Tata Motors a 'preferred bidder' for Daewoo unit
Mumbai: Tata Motors Ltd on Wednesday informed the BSE that it has been selected as the `preferred bidder' for acquiring Daewoo Commercial Vehicle Company Ltd (DWCV) in Korea. This places the Indian company as the top contender to own DWCV, the commercial vehicles unit of Daewoo Motor Corporation. DWCV, at present is the second largest manufacturer of heavy commercial vehicles in Korea with a 26 per cent market share, was incorporated under a reorganisation plan in November 2002.

Its emergence as preferred bidder requires Tata Motors to enter into a MoU with DWCV, followed by a detailed due diligence process. According to DWCV's Web site, the company has a manufacturing capacity of 20,000 units per annum over a 2-shift operation. Though a manufacturer of heavy trucks, DWCV is also said to have the ability to get into medium commercial vehicles. Further, its models straddle the 200-400 hp range which fits in well with Tata Motors' current product line up of upto 200 hp. In the Indian automotive sector, Tata Motors' announcement is the second major proposal for an acquisition overseas after Mahindra & Mahindra Ltd (M&M) lost out in early September, in its bid to acquire Finnish tractor manufacturer Valtra
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Shangri-La to open in Delhi next year
New Delhi: Luxury hotel group Shangri-La Hotels and Resorts, which hopes to have five to six hotels in the country during the next two to three years, on Wednesday announced its maiden foray into the Indian market. The Hong Kong-based group has signed a new management agreement with Hotel Excelsior Pvt Ltd, a member of the Eros group, for a hotel in Delhi. The Delhi hotel is expected to open its doors in December next year, in time for the high tourist season traffic. The 354-room deluxe Shangri-La Hotel is to open at the former State-owned Hotel Kanishka, which is currently closed for renovation.

Hotel Kanishka was being run by the State-owned India Tourism Development Corporation (ITDC) before it was divested as part of the Government's plan to move out of the hospitality sector. Addressing a press conference here, Shangri-La's chief executive officer, Giovanni Angelini, said the Group has been looking at the opportunity that India has to offer for several years now. "It is only now that we have found the right location and partner," he said. Commenting on the Group's plans for India, Angelini said they were already in negotiations for more Shangri-La hotels to come up in other parts of the country. "Our objective is to have five to six hotels in the two to three years. We are looking at the metro areas. Negotiations are on in some places," Angelini said
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Hyundai switches to new insurer, dumps 2 others
Bangalore: Hyundai Motors has switched its allegiance to HDFC Chubb General Insurance for car insurance after it ran into trouble with two major private insurance companies, which it had blamed of indulging in unfair practices. The Hyundai vice-president for customer care service, V.D. Bhasin, told that HDFC Chubb General Insurance is its preferred insurer now and the company is in talks with public sector insurance companies such as National Insurance as well. India's second largest car maker Hyundai Motor had earlier blamed two major private insurance companies of unfair practice and had threatened to take them to court and file a complaint against them with the Insurance Regulatory and Development Authority (IRDA). But later Hyundai decided to ask its dealers to switch over to HDFC Chubb and snap its links with the two insurance firms.

Without naming these two private insurance companies, Hyundai Motor India president, B.V.R. Subbu, had earlier told that while settling accident claims, these companies were forcing customers not to go to an authorised Hyundai service centre and instead get their cars repaired with only those service centres that offer these private insurance companies huge discounts in return for more business. "Just to save some money, these insurance firms are willing to jeopardise the safety of our customers," Subbu said. Explaining the modus operandi of these insurance companies, a Hyundai dealer said whenever these companies received an accident claim, in the pretext of offering free service, they would pick up the car from the customer's home and instead of getting them repaired at one of the authorised service centres of Hyundai, they would take them to a service centre from which they have received a discount. "But we started receiving complaints from our customers that their cars had not been repaired properly and it had developed problems. They assumed that their cars had been repaired at our service centre," the dealer said.

Finding that the complaints had increased substantially, the dealer said one of these two insurance companies agreed to get the repairs carried out at Hyundai's service centre but wanted a huge discount in return, which was turned down by the car manufacturer. "Would these insurance companies agree for a lesser premium? Or at least pass on the benefit of the discount they receive from the service centres to the customers?" the dealer said. He said insurance firms are taking advantage of the fact that the customers are not bound to get their cars repaired only from an authorised service centre of the car manufacturer. "But it is advisable to go to an authorised centre because these centres are manned by company-trained technicians and have the entire range of facilities."
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Pulsar drives Bajaj profits
Mumbai: Bajaj Auto has improved its performance in the second quarter of the current fiscal. Aided by a sharp spurt in motorcycle sales and increased contribution of income from other sources, the company has reported a 55 per cent increase in net profit. Turnover increased 21 per cent to Rs 1,427.71 crore. The sharp pick-up in the motorcycle and three-wheeler sales played a key role in pushing up the turnover. The success of the Pulsar model helped the company record a 27.4 per cent increase in motorcycle sales during the quarter ended September 2003. The success of Pulsar has resulted in a change in product mix in favour of higher value products. After a prolonged sluggish phase, the high margin three-wheeler business has seen some growth during this quarter. The pick-up in economic fundamentals and the normal monsoon this year has pushed up three wheeler sales by 19 per cent. Income from other sources increased sharply owing to higher profitability from investment and treasury related operations. The company has a huge cash reserve that is parked in mutual funds and other investments.

The sharp rise in income from other sources indicates that the company has taken advantage of the recent recovery in stock market. After accounting for an extraordinary expense of Rs 28.6 crore, the post-tax earnings rose 55 per cent to Rs 202.31 crore. Bajaj has come up with a relatively better earnings performance amongst the top three two-wheeler companies. Going forward, the recent launches such as Caliber 115 and Wind 125 would be crucial growth drivers along with the currently popular Pulsar model. The company has also lined up a few new models for launch. Taking into account the product base, technological strength and huge cash chest, Bajaj appears better placed to handle competitive pressure and also tide over unfavourable business environment.
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Bayer India benefits from good agri season
New Delhi: The July-September quarter captures peak kharif season sales for companies in the agrochemicals business. Bayer India's financials for the July-September 2003 quarter reflect the impact of a good season, after a particularly depressed one last year. Bayer India has closed this quarter with a 17 per cent rise in net sales. Revenues appear to have benefited from the sharp expansion in the acreages of rice, wheat and cotton - three key target crops for Bayer India, in the 2003 kharif, leading to improved offtake for its herbicide and insecticide products. In fact, this presages a period of strong revenue growth going forward, as the bumper harvests translate into higher farm incomes, which may be deployed in the coming season.

However, the sharp rise in operating profit margins is the most important feature of Bayer India's financials. In the September 2003 quarter, the company has managed to more than double its operating profits, to Rs 39.7 crore, against the Rs 14.1 crore reported in the same period last year. But for a one-time provisioning for VRS and restructuring expenses, Bayer India's net profits would have been at Rs 30.50 crore for the quarter (Rs 3.1 crore in September 2002 quarter), against the Rs 4.3 crore reported. An improved product mix and cost-reduction efforts appear to have expanded Bayer's profit margins. In recent times, Bayer India has been rationalising its product portfolio by weeding out less profitable businesses, such as the consumer care business, in June this year. The company has also initiated measures such a VRS for its staff.

This has paid off in the form of a significant reduction in both staff costs and sundry expenses in the September 2003 quarter. The informal marketing alliance with Bayer CropScience (earlier Aventis CropScience) is also likely to have started yielding synergistic benefits. The latter is proposed to be merged with Bayer India, once the court order is received. Going forward, Bayer India's proposed hive-off of its non-crop science businesses (rubber chemicals, polymers and specialty products) into a 100 per cent subsidiary, for a better focus on agrochemicals, may cause a blip in the stand-alone revenues of Bayer India. But this may not be material from a valuation perspective, as there would be no impact on the consolidated financials.

The pending merger of Bayer CropScience also promises to perk up Bayer India's financials over the long term. Bayer CropScience has delivered a 60 per cent improvement in its net profits for the September 2003 quarter. Not only is its product basket (comprising mainly of insecticides) complementary to Bayer India's, the addition of its product portfolio is likely to place Bayer India in a market leading position in the domestic agrochemicals market.
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Asian Paints bids for stake in ICI
Mumbai: Asian Paints Ltd has submitted a financial bid for the acquisition of the Government's 9.2 per cent stake in ICI Ltd, the company informed BSE. Imperial Chemical holds 51 per cent in the Indian unit.
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SK Bangur group may run RNPL
Kolkata: The city-based SK Bangur group expects to move into the driver's seat in Rama Newsprint & Paper Ltd (RNPL) by December this year after meeting all formalities as required by the Securities & Exchange Board of India (SEBI). The day-to-day management of RNPL will be vested in West Coast Paper Mills Ltd (WCPML), the flagship company of the group which has a paper mill at Dandeli, Karnataka. The group, utilising internal resources of WCPML, has already acquired 33.85 per cent of the total equity of RNPL from ICICI Ltd for Rs 39.38 crore.

The shares have been valued at Rs 5 each. In a different deal, the group has signed an MoU with the private promoter of RNPL - the Gujarat-based Ramsinghani group and associates - for voting rights of the company equivalent to about 25 per cent of the total shares. The shares held by the Ramsinghani group will, at a later stage, also be bought by the SK Bangur group. As per SEBI guidelines, the group will now offer to purchase a total of 20 per cent of the total shares from the public. WCPML sources said that the offer price will be Rs 8.13 per share, and the entire cost of the purchase from the public will be borne by WCPML.

Meanwhile, the SK Bangur group has firmed up a Rs 125-crore investment programme for RNPL, aiming at increasing the company's annual production capacity from 1,20,000 tonne to 1,85,000 tonnes of either newsprint or writing & printing paper, or both. It also plans one hundred `swinging facilities' to enable the manufacture of either newsprint or writing & printing paper. The WCPML sources said that a 25 MW capacity coal-based power plant would be set up at the mill site in Surat in order to make it self-sufficient in power. Moreover, a new pulp mill would be set up to ensure that it gets virgin pulp to mix with recycled waste pulp. RNPL currently uses only recycled waste pulp. On whether there was any plan to merge RNPL with WCPML, the sources said that there was no such proposal at the moment.
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Ingersoll Rand to buy stake in Srei group arm
Kolkata: Ingersoll Rand (India) Ltd (IRIL), the Indian outfit of Ingersoll Rand Co of US, has decided to acquire a strategic stake of three per cent in Indian Infrastructure Equipment Ltd (IIEL), a member of the Srei International Finance group. IRIL, counted among the largest manufacturers of road building, mining & construction equipment and industrial gas compressors in India, will be investing Rs 2.25 crore for picking up 15 lakh shares in IIEL. The Srei group company operates the country's only equipment infrastructure bank called `Quipo'. Besides Srei, the other major shareholders in IIEL are IFC, Washington and FMO-Netherlands (a major Dutch financial institution), having a combined stale of 40 per cent.

Sunil Kanoria, CMD of IIEL, said that the strategic alliance would not only give Quipo access to IRIL's vast range of modern equipment but help IIEL benefit from the US giant's inputs garnered from years of selling infrastructure equipment across the world. He said that rental companies worldwide have been able to deploy the latest technologies for their customers, while the manufacturers benefit from the extended reach that these rental outfits provide. Kanoria also said that IIEL has been buying construction equipment from IRIL annually to the tune of Rs 25 crore and this figure may now go up. Stating that the preliminary exercise for the acquisition process has been completed, he said that such a strategic partnership between a global infrastructure equipment major and a equipment rental company would be a win-win situation for both.

"The participation in IIEL's equity amply reflects true commitment on the part of IRIL towards Quipo." For 2002-03, IRIL reported net sales of Rs 438 crore and net profit of Rs 40 crore. Daljit Mirchandani, MD of IRIL, said: "We have come at an early stage of Quipo's development because we see long-term synergies with Quipo - as it continues to grow, so will its use of equipment and machinery." Stating that IRIL hoped to reach new customers in new geographies through Quipo, he said that investment in IIEL was in line with the company's current thrust on the growing infrastructure and construction equipment business in India. A boom in road building and construction activities has witnessed a surge in IRIL's business and at present the infrastructure segment accounted for over 6 per cent of revenues. On the first-half performance, Kanoria said that the company, in its second full year of operations, has been able to successfully deploy equipment to the extent of Rs 75 crore, and is poised to exceed the targeted Rs 100-crore deployment by end-March 2004. During 2002-03, IIEL deployed equipment to the tune of Rs 48 crore.
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LG to set up facility in south
Thiruvananthapuram: LG Electronics, the consumer durables major, is planning to set up a base in the South and proposes to outsource manufacturing business worth Rs 750 crore "to begin with".This was disclosed here by K.R. Kim, managing director, LG Electronics India, while formally introducing the company's GSM phones in the Kerala market. The choice of the location for setting up the manufacturing unit in the south would boil down to that state whose government offers the best deal in terms of tax and other incentives so as to make a viable business proposition of it, Kim said. A final decision would be taken after the company commissions the manufacturing units at Greater Noida and Pune. The company is willing to support local manufacturers in terms of capacity utilisation and decentralised industrial activity, Kim said. On the Kerala market, he said the State had great potential and it had been a high growth area for the company in the recent past.

The festive promotions by LG in this region involved a budget of Rs 70 lakh, which included spends on consumer promotions, below-the-line activities and gifts. The company had seen overall growth of 88 per cent in sales during January-September this year over that of the same period last year. Having made a mark for itself as a technologically sound company, the next logical step for LG Electronics was to ensure pre- and post-purchase customer satisfaction. With this in mind, the company was taking a number of initiatives towards further improving its service, concentrating on in-shop branding and other below-the-line activities. According to Sunil, the response during the current season has been healthy enough. "We plan to achieve a turnover of Rs 150 crore this year against last year's Rs 80 crore", he said.
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STC may hit Rs 5,000-crore turnover target
New Delhi: State Trading Corporation of India Ltd (STC) is well on its way to achieving a Rs 5,000 crore turnover and good profitability during the current fiscal if the first half of the company's performance was any pointer. This was stated here by the STC chairman and managing director, Dr Arvind Pandalai, when he handed over a dividend cheque for Rs 5.46 crore to the union commerce and industry minister, Arun Jaitley, in the latter's office here on Wednesday. Dr Pandalai was of the view that considering the amount of losses suffered by the company in the past two consecutive years, the performance during the current year so far has been noteworthy. He ascribed this to a host of fresh initiatives made during the year including diversification of the import-export baskets of commodities and markets. Dr Pandalai noted that during 2002-03 the corporation achieved an all-time high turnover of Rs 2,533 crore on its own commercial account, based on its own core strength in areas where it acquired a measure of expertise over the years.
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Ranbaxy, Glaxo in R&D joint venture
New Delhi: Pharma majors GlaxoSmithKline (GSK) and Ranbaxy may fight turf wars in the US pharmaceutical market, but they have decided to come together for the discovery and development of new drugs in the urology, anti-diabetic, anti-bacterial, asthma and anti-fungal segments.Taking one large leap in terms of converting itself into an "engineering company compared to a re-engineering company", homespun Ranbaxy Laboratories on Wednesday inked the dotted line with global drug major GSK Plc, with whom it has sparred several times over issues of intellectual property. "It is the maturity of GSK that has made the alliance happen. What happens on the generic front is a different issue. The companies have seen that there is an opportunity to benefit from collaborating for New Chemical Entities (NCE). GSK has the maturity not to combine the two issues," pointed out Dr Rashmi Barbhaiya, Ranbaxy's President (Research and Development).

Call it "maturity" or "business sense", the agreement envisages that Ranbaxy will be responsible for optimisation of a lead discovery to the generation of a candidate that could be developed into a drug. The company would be involved with the pre-clinical trials and early clinical trials as well, he told mediapersons in a conference call from the US. GSK top brass on a visit to India earlier this year scouting for local partners had told this correspondent that the company would keep the clinical trials of a drug within its jurisdiction. Dr Barbhaiya said, "At the point of candidate selection, GSK and Ranbaxy would take a decision on who would take the process further up to commercialisation of the drug." The agreement was for a finite period of five years. However, this would not limit any drug development process that either company was undertaking as a follow-through from the alliance. Meanwhile, the companies would also set up an executive steering committee that would oversee the operation of the alliance. GSK will hold exclusive commercialisation responsibilities worldwide, while Ranbaxy will have the controls for India, the Ranbaxy R&D chief said.

Further, he pointed out that the revenue-sharing pattern and intellectual property-related issues, such as who would hold the patents for the drugs, had been discussed. He was unwilling to disclose details. However, he said in the event of disputes, there were `dispute resolution provisions' incorporated in the agreement. Sanjiv D. Kaul, vice-president (Global Licensing), said the agreement was a milestone in pharmaceutical research in the country.
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Dabur's UK subsidiary signs pact with Abbott, US
New Delhi: In a day of announcements of tie-ups between domestic pharma companies and their foreign counterparts, Dabur India Ltd today said that its UK-based subsidiary had entered into an exclusive strategic alliance, in the cancer segment, with the US-based Abbott Laboratories.

Abbott Laboratories is a global major in the US injectibles pharma segment and its alliance with Dabur Oncology Plc is to market the finished dosage forms of Dabur's product in the US market, a company communiqué issued here today said. The alliance would largely span the development, manufacture and marketing of prescription generic oncology products in the US. Further, the company pointed out that a joint management committee comprising members from both the companies would be formed to manage the alliance. Global estimates put the value of oncology products losing patent protection by 2010 at over $15 billion. Accenture, appointed by Dabur Pharma in developing and executing its strategy for the pharma segment, assisted Dabur in this deal, the company said. Dabur Pharma has a dosage manufacturing facility in Bordon, UK and an Active Pharmaceutical Ingredients (API) manufacturing facility in Kolkata.
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