B U S I N E S S

Gas allocation to Maruti cancelled
New Delhi, January 7
Petroleum Ministry has cancelled the natural gas allocation of car manufacturer Maruti Udyog Ltd and reallocated the same to Indraprastha Gas Ltd to meet the CNG demand of automobiles in Delhi.

Maruti Finance launched
Mumbai, January 7
Maruti Udyog Ltd today launched Maruti Finance in alliance with leading finance companies in the country. Through this venture, Maruti would offer its customers car finance at competitive interest rates through its dealership network, MUL Managing Director Jagdish Khattar told reporters here.

Intel to unveil fastest chip
San Francisco, January 7
Intel Corp. will unveil its fastest-ever microprocessor, a Pentium 4 chip that not only allows it to maintain its leadership over rival Advanced Micro Devices Inc. but also introduces what analysts said is a critical improvement in Intel’s memory chip technology.

Beopar Mandal opposes VAT system
Rohtak, January 7
The Haryana Beopar Mandal has opposed the introduction of Value Added Tax (VAT) system in place of sales-tax and described the measure as ‘anti-trader’. As per a decision of the Centre, the sales-tax in the country would be replaced by VAT from April 1 next.

We are prepared to face competition: MTNL chief
New Delhi, January 7
State owned Mahanagar Telephone Nigam Ltd said today it was fully prepared to face competition in the basic telephone services in Delhi and Mumbai from the private service players and is planning to introduce various “customer loyalty schemes”, a top company official said.

ICICI safety bonds issue on January 10
Mumbai, January 7
ICICI Ltd will make its seventh public offering of unsecured redeemable bonds in nature of debentures aggregating Rs 600 crore under the umbrella prospectus, approved by the Securities and Exchange Board of India.

ANALYST’S DIARY

Mukta Arts still a dark horse
THE nature of our work affords us the opportunity to meet several promoters and get an early insight into their companies and its prospects. Among the more hyped IPO’s in recent times was that of Mukta Arts Limited, which had as its USP, none other than the Bollywood showman Subash Ghai as its promoter. To start with, Subash Ghai does not take too kindly to the term Bollywood and prefers to refer to it as Hindi cinema. So be it, but as far as we stock buffs are concerned, the bottomline is what matters, name it what you like.

ROUND-UP

Royal Philips to buy stake in arm
New Delhi
Netherlands-based Royal Philips Electronics has decided to make an open purchase offer for 17.1 per cent of public shareholding in its Indian subsidiary Philips India at Rs 105 per share. This will increase the parent’s holding to 100 per cent which intends to delist the company if holding crossed 90 per cent.

• Honda-GM pact report denied

• Essel group to pay 220 cr dues to Zee

Subsidies on kerosene, LPG to continue
Mumbai, January 7
The subsidies on kerosene and LPG will continue for some more time even after India gives up administered price mechanism. Union Petroleum and Natural Gas Minister Ram Naik said today.

UCO Bank raises 150 cr
Kolkata, January 7
UCO Bank, which has gone in for another round of Tier-II capital, to improve its capital adequacy ratio (CAR), has raised Rs 150 crore in the just closed issue.

Gas allocation to Maruti cancelled

New Delhi, January 7
Petroleum Ministry has cancelled the natural gas allocation of car manufacturer Maruti Udyog Ltd (MUL) and reallocated the same to Indraprastha Gas Ltd (IGL) to meet the CNG demand of automobiles in Delhi.

“The Gas Linkage Committee (GIC) last month cancelled the 0.5 million cubic metres per day of gas allocated to MUL and decided to reallocate to the IGL,” senior Petroleum Ministry officials said.

When contacted, Petroleum Minister Ram Naik confirmed the development saying “MUL’s gas allocation was of temporary nature and we have now decided to cancel that to meet the growing requirement of CNG for transport vehicles in Delhi.”

MUL was allocated 0.5 million cubic metres of gas from the Hazira-Bijapur-Jagdishpur (HBJ) pipeline on temporary basis till such time as the Delhi Vidyut Board’s Pragati power plant is commissioned, he said.

A Maruti spokesperson, however, told PTI that the company was receiving its quota of gas and production was going on smoothly.

Stating that IGL’s allocation has been increased from 0.38 million cubic metres per day to 0.88 million cubic metres per day, Naik said stand-by allocations for other small industries in Delhi have not been touched.

Out of the total availability of 39-40 million cubic metres per day of natural gas on HBJ pipeline, fallback or stand-by allocations to industries in and around Delhi is around 1.32 million cubic metres per day.

To address the dispensing bottleneck, IGL is procuring 29 new compressors and 300 new dispensers, Naik said.

By February end, IGL would be geared to dispense 10 lakh kgs per day of CNG, which would be adequate to service 8000 buses plus other vehicles per day.

Keeping in view the Supreme Court deadline of January 31, 2002, IGL would be able to service additional buses plus other vehicles with its increased dispensing capacity of six lakh kgs per day by that date, he said.

IGL has planned to increase the number of its CNG filling stations strength from the present 87 to 120 by March 2002, of which there would be a total of 14 dedicated stations for DTC, up from the present nine.

The company is also in the process of laying a new CNG pipeline stretching from Dhaula Kuan to GT Karnal Road and build 14 new online stations along it. PTI

Maruti Finance launched

Mumbai, January 7
Maruti Udyog Ltd today launched Maruti Finance in alliance with leading finance companies in the country.

Through this venture, Maruti would offer its customers car finance at competitive interest rates through its dealership network, MUL Managing Director Jagdish Khattar told reporters here.

The rate of interest would be common and the finance companies would offer the same terms to its customers, he said.

ABN Amro Bank, HDFC Bank, ICICI Ltd, Kotak Mahindra, Standard Chartered Bank and Sundaram Finance had tied up with MUL besides its existing joint ventures with Citicorp and Maruti Countrywide.

Khattar said at least three companies would be allotted to each dealer and Maruti Finance would roll out in the rest of the country over the next six months.

He said Maruti Finance was one of the four auto related businesses that MUL was entering into, the others being lease and fleet management for corporates, pre-owned cars and auto insurance enabling it to provide solutions and extend its relationship to the customers. PTI

Intel to unveil fastest chip

San Francisco, January 7
Intel Corp. will unveil its fastest-ever microprocessor, a Pentium 4 chip that not only allows it to maintain its leadership over rival Advanced Micro Devices Inc. but also introduces what analysts said is a critical improvement in Intel’s memory chip technology.

The Pentium 4 running at 2.2 gigahertz, or 2.2 billion cycles per second, is the world’s fastest in terms of clock speed.

The primary computing engine of personal computers, the new chip is a product of the latest in manufacturing technology to boost performance and cut production costs for the world’s largest semiconductor maker.

PC makers, including Dell Computer Corp. and Compaq Computer Corp., will have PCs using the chip available on Monday, Intel executives said on Friday in an advance briefing on the product.

Intel also said its 845 chipset, which connects the microprocessor to the rest of the PC, now supports DDR, or double-data rate, memory. DDRdynamic random-access memory, or DRAM, chips are faster than traditional DRAM chips or synchronous DRAM chips.

Intel had been criticized for being late with DDR. Its principal rival in the processor business, AMD, has had DDR DRAM available since last year.

“They’ve got to enable the DDR, which they’re now doing and I’d argue that’s almost more important than this latest Pentium 4,’’ Needham & Co. analyst Dan Scovel said. “Putting SDRAM on a Pentium 4 is like putting training wheels on a Porsche.

The latest microprocessor is the first Pentium 4 chip that uses 0.13 micron fabrication process using copper interconnects, rather than aluminium. Copper conducts electricity better than aluminium, boosting efficiency and performance. Previous Pentium 4 chips have been made with a 0.18 micron manufacturing process.

The smaller dimensions mean that on the latest Pentium 4 chip, it will take almost 1000 of the tiny “wires” that help make up transistors placed side by side to equal the width of a human hair.

Intel’s latest chip comes after a disappointing market for PC sales in 2001 and at the beginning of one of the slower times of the year for the industry. Even as other technology companies cut capital spending in 2001 amid flagging demand and the U.S. Recession, Intel did not, spending $7.5 billion in 2001. Reuters

Beopar Mandal opposes VAT system
Jatinder Sharma

Rohtak, January 7
The Haryana Beopar Mandal has opposed the introduction of Value Added Tax (VAT) system in place of sales-tax and described the measure as ‘anti-trader’.

As per a decision of the Centre, the sales-tax in the country would be replaced by VAT from April 1 next. Opposing the new taxation system, the Beopar Mandal Chief, Mr Laxmi Chand Gupta said that the VAT would complicate problems for the traders instead of solving any of them.

Every trader in India, he said, would have to get a new registration number after the VAT comes into force on April 1. The minimum registration fee is Rs 5000 and in case any trader fails to get the new registration number, he may have to pay heavy fine including imprisonment, Mr Gupta said.

The Beopar Mandal feel that with the introduction of VAT, the paper work for traders would multiply and it would not be possible for a majority of traders to keep proper records. In that case every trader would become a victim of VAT Act, Mr Gupta said.

Mr Gupta said that though the BJP and the Congress parties have been advocating abolition of sale-tax, these political outfits have never mentioned about introduction of VAT.

The Beopar Mandal President said that both, the BJP and the Congress had been pleading for levying duty on the pattern of Excise Duty after abolishing sales-tax. The levy, he said, could be imposed at the entry point in case of imported items or at the manufacturing point on items manufactured locally like cigarettes, sugar and cloth.

Mr Gupta told that the Centre’s proposals to replace sales-tax with VAT would be discussed at the meeting of the All-India Udyog Beopar Mandal at Delhi on January 16. The proposed meeting, he warned, might take a decision to the disliking of the union government.

The Haryana Beopar Mandal, he said, would abide by the decisions of the All-India Udyog Beopar Mandal and every trader was opposed to the introduction of VAT system. The Beopar Mandal has called upon its members to be prepared for any agitation including the “Bharat Bandh”.

We are prepared to face competition: MTNL chief

New Delhi, January 7
State owned Mahanagar Telephone Nigam Ltd (MTNL) said today it was fully prepared to face competition in the basic telephone services in Delhi and Mumbai from the private service players and is planning to introduce various “customer loyalty schemes”, a top company official said.

Bharti Group is slated to launch fixed line services in Delhi later this month and the company has already started marketing of its services.

“MTNL has been aggressively addressing the issue and is aware of the competition,” MTNL Chairman and Managing Director Narinder Sharma told PTI, adding that “we are introducing customer loyalty schemes to retain them.”

Mr Sharma said the high-end users both in Delhi and Mumbai can expect to get specialised services and facilities from the state owned telecom giant.

He, however, refused to give details about the schemes but emphasised “various schemes are in position and we are ready to take on the competition.”

On MTNL’s recently launched limited mobility services through Wireless in Local Loop (WLL), Sharma said of the total capacity of 50,000 connections the quota of mobile phones has been exhausted while for fixed line connections was still open for customers.

As part of customer friendly schemes, MTNL will be offering cordless phone instruments at a nominal monthly rental to its subscribers, Sharma said, but declined to give details about the rental.

MTNL is already offering answering machine services to its subscribers in various exchanges, but it was also planning to extend this facility by offering individual answering machines and not as part of exchange facility.

Mr Sharma emphasised that there are many more accessories the corporation has planned to give to the customers.

According to sources, MTNL gets major portion of their revenue from just 15-20 per cent of their high-end users and the private service providers would be eyeing to grab that particular segment.

Asked about the additional cost to MTNL for offering these customer loyalty schemes, Sharma said it was “insignificant”. PTI

ICICI safety bonds issue on January 10

Mumbai, January 7
ICICI Ltd will make its seventh public offering of unsecured redeemable bonds in nature of debentures aggregating Rs 600 crore under the umbrella prospectus, approved by the Securities and Exchange Board of India.

The issue would open for subscription on January 10 and close on January 24, ICICI said in a release here today. The bonds have been assigned AAA ratings by credit rating agencies like ICRA and CARE, signifying highest safety with regard to timely payment of principal and interest.

The issue offers various options under five types of bonds-- Tax Saving Bond, Encash Bond, Regular Income Bond, Money Multiplier Bond and Children Growth Bond, the release said adding Non-Resident Indians and Overseas Corporate Bodies were also eligible to invest in these bonds. PTI

ANALYST’S DIARY

Mukta Arts still a dark horse
Ashok Kumar

THE nature of our work affords us the opportunity to meet several promoters and get an early insight into their companies and its prospects. Among the more hyped IPO’s in recent times was that of Mukta Arts Limited (MAL), which had as its USP, none other than the Bollywood showman Subash Ghai as its promoter. To start with, Subash Ghai does not take too kindly to the term Bollywood and prefers to refer to it as Hindi cinema. So be it, but as far as we stock buffs are concerned, the bottomline is what matters, name it what you like.

A flashback indicates that MAL had embarked on a self-appraised Rs 100 crore project, of which, the prime objectives included the setting up of an Integrated Studio-cum-Research & Training Institute (Rs 23 crore) and the acquisition of movie rights and music albums (Rs 25 crore). In the absence of institutional appraisal and participation, the project was to be entirely equity financed. While the objectives, prima facie, appeared to be feasible, the bothersome fact was that the payback from the setting up of a training institute may take some while in coming raising doubts about its standing up to the revenue model scrutiny.

The financial track-record of the company has been lopsided, and that is primarily because of the nature of its prime business of film-making which, in case of MAL has a pay-back cycle of 18 months. This then results into sharp upswings and downswings in income and bottomline levels as there will be accounting periods that predominantly reflect expenses, with the revenues flowing in, in a cluster at the culmination of the cycle.

The biggest plus point and USP of this company is Subash Ghai, MAL’s promoter and showman-par-excellence. Ironically though, it in some ways also becomes a point of weakness for MAL as his personality looms large over the company suggesting that the company is largely personality driven. However, the string of box-office hit films that Ghai has churned out over the years translates into “golden” content and highly potent revenue-earning stream for the company.

Similarly, the brand equity of the promoter is very high translating into the music and advertising rights of its films being pre-sold, thus ensuring an early break-even with subsequent revenue flows, which incidentally, would be substantial when a movie does well, enhancing the bottomline. Again, the fickle nature of box-office fortunes is akin in many ways to those at the bourses, and that again casts a shadow over the company.

MAL’s management will have to display hitherto unproven corporate maturity, which is something that most analysts have been skeptical about. This will send out the right signal to investors whose faith on the company hinges around Ghai’s proven ability to churn out one box-office hit after another. MAL’s shares currently trade closer to its 52-week low than its IPO price, and though it would be imprudent to underestimate Ghai’s ability to set the cash counters ringing, the fact that it will be a while before the relative non-success of “Yaadein”, MAL’s last production is discounted.

Finally, an aside. At the time of MAL’s IPO it was pointed out that international media companies like Time Warner & MGM enjoy a P/E multiple of 75 plus at the American bourses. Well, even a novice would know that there is a long way to go before MAL comes even close to achieving the kind of levels of professionalism that these companies can boast of.

Furthermore, no amount of convincing will change the fact that MAL’s fortunes revolve around those of Subash Ghai whose fortunes in turn revolve around the box office. So at the end of the day, MAL will have to bide its time before entering the big league on the corporate front, but, yes of course, it continues to remain a dark horse.

ROUND-UP

Royal Philips to buy stake in arm

New Delhi
Netherlands-based Royal Philips Electronics has decided to make an open purchase offer for 17.1 per cent of public shareholding in its Indian subsidiary Philips India at Rs 105 per share.

This will increase the parent’s holding to 100 per cent which intends to delist the company if holding crossed 90 per cent.

The open offer, subject to necessary statutory approval, begins tomorrow and closes on February 5, 2002, and is managed by DSP Merril Lynch, a company release said here yesterday.

The offer price of Rs 105, which is the 52-weeks high, has premium of 35 per cent over the closing period of Philips India at the BSE on November 20, 2001 and a premium of 48 pc over the SEBI mandated price, it said. PTI

Honda-GM pact report denied

Tokyo
Japan’s Honda Motor Co. denied today a report that it would cooperate with US auto giant General Motors Corp. to recycle scrapped cars in Europe.

“We have not had such discussions with GM,” a Honda spokesman said, declining to be named.

“We are not considering such a joint effort at this point,” he said.

The statement scotches a report in the Nihon Keizai Shimbun newspaper which said Honda had decided to work with GM because the Japanese carmaker held just 1 per cent of the European market, making it difficult to operate a recycling network on its own. AFP

Essel group to pay 220 cr dues to Zee

Mumbai
The promoters of the Essel group of companies including Subash Chandra, will clear their entire dues worth Rs 220 crore to Zee Telefilms Ltd this week and place 9 lakh equity shares of personal holding with a foreign institutional investor.

The promoters have so far returned about Rs 148 crore and proceeds of this placement will be paid back to ZTL upon settlement, an Essel group release said here yesterday.

“We are going to return the entire remaining dues to ZTL within the course of this week”, President corporate finance A C Saha said. PTI

Subsidies on kerosene, LPG to continue

Mumbai, January 7
The subsidies on kerosene and LPG will continue for some more time even after India gives up administered price mechanism. Union Petroleum and Natural Gas Minister Ram Naik said today.

Talking to newspersons on the sidelines of the inauguration of the Fourth Conference of Petroleum Geophysicists, which began here today, Mr Naik said that 33 per cent subsidy on kerosene and 15 per cent on LPG cylinders would continue even after the APM. However, he also made it clear the same will not be extended to new private LPG or kerosene distributors.

Mr Naik said that looking at the difficulties faced by the consumers in remote areas of Jammu and Kashmir, Leh and Lakshdweep, the government had decided to reduce the cost of LPG cylinders in the range of Rs 70-90 per cylinder, so that they do not face financial burden on account of transportation. UNI

UCO Bank raises 150 cr

Kolkata, January 7
UCO Bank, which has gone in for another round of Tier-II capital, to improve its capital adequacy ratio (CAR), has raised Rs 150 crore in the just closed issue.

Bank officials said they had to go in for second round of Tier-II capital after the Finance Ministry refused to allot funds for recapitalisation. The issue with green shoe option, which opened in the third week of December, 2001, and closed on January 5 this year, was oversubscribed by “substantial amount”. PTI

BIZ BRIEFS

Sports Wheel
Chandigarh, January 7
Continental A.G. of Germany has tied-up with the Metro group to set up world’s first of its kind hi-tech Rubber Sports Wheel project in India. The product, rubber sports wheel, used in roller skates is a technological breakthrough against the conventional polyurethane sports wheel and are being developed for the first time in the world. TNS

JK Corp
Chandigarh, January 7
Mr Bharat Hari Singhania has been appointed the Vice-Chairman and Managing Director of JK Corp Limited, the cement focused company of the JK group. Mrs Vinita Singhania, also, has been appointed as Managing Director of JK Corp Ltd. TNS

Allahabad Bank
Chandigarh, January 7
Allahabad Bank plans to link online its extension counters with main branches soon said Mr Deepak Narang, Assistant General Manager of the bank at the managers’ meeting last evening. Mr Vijay Chopra, AGM (Jalandhar zone) and Mr N.K. Sood, General Manager (retd) were present on the occasion. TNS

Escorts
New Delhi, January 7
Credit rating agency ICRA today revised the rating of Rs 75 crore commercial paper programme of Escorts Ltd from A1 + to A1, with the revised rating also indicating highest safety in the short term. PTI

SBI ATM centres
Hyderabad, January 7
The State Bank of India (SBI) will open 1,000 ATM centres in the country soon, SBI Managing Director Radhakrishnan said here today. UNI

Gramin Bank
Hamirpur, January 7
Hamirpur got the first branch of the Himachal Gramin Bank here today. It will be the 104th branch of the bank in Himachal Pradesh. Mr Suresh Chandel, MP, performed the inaugural ceremony and Mrs Urmila Thakur, HP Parliamentary Secretary, also attended the function. OC