HFCL plans acquisitions in telecom, tech sectors
Mumbai: Himachal Futuristic Communication Ltd. (HFCL), the Rs 600-crore telecom equipment maker, is planning acquisitions in the telecom and technology sector that will enable the company consolidate its presence in the telecom sector and enter into the technology sector.

According to company sources, it is in the final stages of negotiations for an acquisition in India. The deal is said to be valued at about $7 million to $10 million. The company plans to use the funds mobilised by it in the past few months to finance the acquisitions. The company has already received Rs. 900 crore, which is part of the Rs. 1,800 crore preferential allotment it made to institutional investors and Australian media mogul, Mr. Kerry Packer.

The company has also used the proceeds of an earlier issue of shares made in April 2000, to repay institutional loans of Rs. 400 crore. This repayment has helped the company reduce its interest costs.
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US giant, Caterpillar, may buy Hindustan Motors division
Mumbai: According to a report appearing in the Economic Times, the earth-moving equipment division of the CK Birla controlled, Hindustan Motors Limited, is set to be sold to the $19-billion Illionois-based giant, Caterpillar Inc. The report states that the US company -- which is the world’s largest manufacturer of construction and mining products, diesel and natural gas engines and industrial gas turbines -- is at an advanced stage of negotiations with the C K Birla group for the acquisition.

The US company has also offered to buy out the C K Birla group’s 37 per cent stake in Hindustan Power Plus, in which Caterpillar has a 38 per cent stake.

If both deals go through, it would give Caterpillar a strong foothold in India.

The earth-moving equipment division of Hindustan Motors has two manufacturing facilities, located at Tiruvallur (Tamil Nadu) and Pondicherry. The factory at Tiruvallur is sub-divided into dumper plant, loader plant, TTV plant, first operations plant and axle plant.

The second factory at Pondicherry was set up in 1994. It was started as an assembly unit for the Hindustan 2021 loaders but is now a full-fledged manufacturing unit, which also produces the Hindustan 50HX Backhoe Loader, Loader Axles and various other aggregates.

HPP manufactures internal combustion engines in the range of 180-1,944 KVA, at a factory located in Hosur in Tamil Nadu. The main applications for HPP engines are gensets for captive power (50%), compressor (20%), earthmoving equipment (15%) and marine and other industrial applications (15%).
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Air India gets a jolt on the Caibjet deal
Mumbai: India’s international airline, Air India, which has been in the midst of a messy legal tangle in respect of aircraft taken on wet-lease from Caribjet, has just got another jolt in the case. In addition to the compensation it has to pay the leasing company, the airline is now being stuck with an income-tax demand for another Rs 136 crore.

Air India’s problems with Caribjet arose when it terminated its wet-lease (leasing aircraft with pilots and crew) agreement with Caribjet for three aircraft in September 1997, 15 months before the contract ended. The airline had leased the aircraft from the leasing company at the rate of $5,540 per hour, which many industry sources considered prohibitive for an airline steeped in red. The 'take or pay' contract meant that Air-India had to payout a penalty even when the aircraft were not in use.

The lease for the three aircraft, two L1011s and one A 310, was terminated on technical grounds. Caribjet subsequently filed a suit citing improper termination of the contract.

In the arbitration proceedings, instituted at the international court at London, for resolving the issue, Air India has been asked to pay Rs 103 crore to Caribjet as compensation for terminating the contract. The same bench of arbitrators has ruled that the tax demand should be made on Air-India and not on Caribjet.

The issue of tax arises from Caribjet’s operations in India from 1994 to 1997. The company was granted special exemption by the tax tribunal, which implied a tax liability of only 2.5 per cent on income from its India operations. Caribjet has submitted that profits margins were at levels of about 44 per cent. The IT authorities withdrew the provisions under Section 48 BBA and

Caribjet was asked to pay tax at 48 per cent, the rate then applicable to all foreign companies operating in India. The tax authorities had ordered Air-India not to pay the arbitration amount of Rs 103 crore to Caribjet unless the latter cleared its tax dues.

The two parties then approached the same London bench for arbitration on the issue. The panel ruled last week in favour of Caribjet, which means the loss-making Air India will now have to fork out an additional Rs 136 crore.

The company is examining legal steps it can take against the recent ruling.
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Maruti bids goodbye to diesel Gypsy
New Delhi: Terming it as "unviable", the country’s leading passenger car manufacturer, Maruti Udyog Ltd., has quietly buried its plans to introduce the diesel version of its multi-utility vehicle Gypsy. However, its plans to roll out a diesel version of its mid-sized car, Esteem, are however afoot.

The decision not to launch a diesel version of the Gypsy was based on the high cost addons, which made the process uneconomical and unviable. At present, Maruti imports the diesel engines from Peugeot of France.

Earlier, the company had decided to go slow on the diesel version of the Gypsy in the wake of embarrassingly low sales figures for the Zen-D.
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AgrEvo India and Rhone-Poulenc Agrochemicals to merge
Calcutta: Following the global scene, Aventis CropScience, which was formed by the merger of Rhone Poulenc Agro and AgrEvo, is set to merge the two entities in India. While the two companies have already entered into a strategic alliance in India, Aventis CropScience will evaluate te merger option by the end of this year. This was announced by the deputy managing director of Aventis recently. If the merger comes through, the crop science and seeds industry in the country will be poised to witness a big bang.

The Aventis CropScience group in India currently comprises four entities held variously by parent company Aventis CropScience Holding SA, Lyon —AgrEvo India Ltd, Rhone-Poulenc Agrochemicals (India) Ltd, Bilag India Ltd and ProAgro Seeds, which was recently acquired.

The group is also considering a strategic alliance with ProAgro Seeds, in a bid to offer a comprehensive package to farmers, that will help the farmer in the for production of his crops as well as its protection. The company proposes to offer complete crop packages and substantial increased benefits to farmers in key crops like rice, cotton, vegetables, chillies and wheat.
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A-I terminates general sales agents
New Delhi: In its bid to revamp its marketing and distribution policy aimed at cutting costs, the country’s international airline, Air India, has issued termination notices to its general sales agents in London, New Delhi and Toronto.

As already reported earlier, the airline plans to replace all the 70-odd GSAs working for the company will be replaced with consolidators, who are paid lower commission. As GSAs get 9 per cent agency commission plus 3 per cent overriding commission, the cost of distribution to the airlines is higher under this avenue. According to estimates made by Air-India, the direct saving on account of replacement of GSAs with consolidators will be Rs 20 crore per annum.

The new policy, which was cleared by the Air-India management and civil aviation minister Sharad Yadav, policy allows the company to appoint several consolidators instead of having one GSA for each territory. The policy would also result in more competition and wider choice to customers.

But even as the company goes about implementing its new policy, questions have already been raised, on the way it has gone about selecting the consolidators who will replace the GSAs’. The advertisement calling for applications for the UK and Ireland territory, for example, was issued in only in an ethnic Indian newspaper, leaving out the mainline dailies of London. Besides, the criteria specified for the consolidators is a minimum agency turnover of 20 million, which works out to over Rs 130 crore.

Travel industry sources say that Air-India was restricting competition by specifying such a high turnover in the eligibility criteria, as only a few companies would qualify as the selection is among those operating on the India-UK and US-UK routes.

The company has further compounded the problem by stating that it reserves the right to appoint it present GSA as one of the consolidators. While the company states that this decision is based on ensuring continuity of business, industry sources said it would restrain competition since the move gives special treatment to the company enjoying the monopoly, which the new policy seeks to end, instead of selecting the best candidate.
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Essar group gets fresh loan of Rs 1,154 crore from institutions
New Delhi: After months of dithering, financial institutions led by IDBI and ICICI, at a meeting of its senior executives recently, have agreed to give fresh assistance of Rs 1,154 crore to Essar group. The fresh funds have been given for Essar Oil's refinery project, Essar Shipping's terminal project and Vadinar Power Company Ltd. Besides, the institutions have also agreed to fund interest for further period upto December 31, 2001.

This decision will now be put to the committee of the heads of institutions for its approval. Essar Oil has agreed to raise additional equity of Rs 400 crore by way of sale of assets.

Essar Oil and Essar Shipping's 10.50 million tonnes per annum refinery and oil terminal projects have suffered a major time and cost overrun. The cost overrun is estimated to be over Rs 1,000 crore. Essar group's total borrowings from FIs as on September 30, 1999, stood at a whopping Rs 4,635 crore.
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Cadila Healthcare set to launch rDNA viral vaccine
Mumbai: The fast-growing Cadila Healthcare, belonging to the Zydus group, is riding the crest of the biotech wave, thanks to the research being done in its R&D labs. In the pipeline is an r-DNA-based viral vaccine--for which gene cloning will commence soon--bacterial vaccines, and even a new-generation anti-rabies vaccine (the first of its kind in the world). The r-DNA, sub-unit vaccine will be a highly potent, single-dosage vaccine. The recombinant anti-rabies vaccine project is perhaps the first of its kind in the world.

According to Mr. Ganesh Nayak, president of Zydus Cadilla, research on the r-DNA-based therapeutic protein has been completed, and animal toxicity studies have been initiated. The product will be used in post-operative and post-transplant conditions. The company is also in the process of making available commercially, a typhoid vaccine.

The company, which has a collaborative research project with the Tamil Nadu Veterinary University (TANUVAS) for developing a new-generation anti-rabies vaccine, is hoping for several new products from this effort.

According to Mr. Pankaj Patel, the managing director of the company, given the fact that nearly 30,000 persons die each year in the country due to rabies, there is a tremendous need for a modern anti-rabies vaccine that is more potent, safe and economical. The company believes that the r-DNA, anti-rabies vaccine will be a pioneering product and will have a cutting edge.

Zydus Cadila is also plannin to manufacture the purified duck embryo vaccine in technical collaboration with the Swiss Serum and Vaccine Institute, Berne, and has created a special unit to manufacture this product at its Moraiya plant. The vaccine is expected to be ready for launch in the fourth quarter of 2000.
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Ford may weigh options to import Taurus, Lincoln
Mumbai: The Indian subsidiary of the world’s second largest car company, Ford India Limited, in contemplating the introduction of many of its overseas models in the country. Additionally, the company will start exporting Ford Ikon from October this year to Latin American and African countries.

In light of the removal of quantitative restrictions from April 2001, the company is contemplating the introduction of the Lincoln and Taurus models from its US market and the Focus, Ka and the mini van from its European operations, in the country. The company has identified a niche demand for these cars in the country.

The final decision on the import of these cars will be taken based on the costing implications and the demand for the said cars.

The company, which currently produces 88 Ikons a day, is planning to increase the production level to 100 cars a day, without introduction of an additional shift. The company recently reached the benchmark production level of 10,000 Ikons.

The company also showcased on Saturday, the IKON GT and the IKONcept 2003, the two designer cars remodelled by designer Dilip Chabria.
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Visa, Mastercard face anti-trust trial
Washington: Coming close on the heels of an anti trust case against the world’s largest software company, the US government is now targeting Visa and Mastercard, America’s largest credit card networks, to face trial tomorrow in a US District court in New York on charges of conspiring to thwart competition. Visa and Mastercard together control 75 per cent of all credit cards.

The government’s contention has been that the two do not compete with each other because they are controlled by the same banks. Further, the government has argued in pre-trial motions that the banks only use either the Visa or Mastercard network and are not permitted to issue American Express or Discover, Morgan Stanley Dean Witter’s cards.

Visa has 247.8 million cards charging $537.3 billion, Mastercard has 180.7 million cards charging $303.6 billion, Amex, 29.9 million cards charging $70.6 billion and Discover, 48 million cards.
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