Gujarat Ambuja acquires another 4 per cent in ACC from Tatas
Mumbai: In a sequel to the deal already concluded, the Tata group sold yet another 4 per cent stake in cement company, ACC Limited, to India’s most profitable cement company, Gujarat Ambuja Cements Limited (GACL). With this acquisition, the shareholding of GACL in ACC has risen from 7.2 per cent to 11.2 per cent. The new stake has been acquired for an estimated Rs 252.9 crore.

This deal, however, does not come as a surprise, since in December 1999, when GACL acquired the first tranche of 7.2 per cent, the Tatas had agreed to transfer its balance holding of 7.2 per cent in ACC to GACL.

In March 2000, GACL transferred the ACC stake to its newly-created subsidiary Ambuja India. GACL holds 60 per cent in Ambuja India and the balance is held by a group of foreign funds such as AIG Asian Opportunity Fund and the Government of Singapore Investment Co.

The Sebi investigation in mid-April revealed that Ambuja’s stake in ACC does not trigger off the Takeover Code, even if the Ambujas acquire the entire Tata stake of 14.4 per cent. This is because, Sebi believes that, GACL is not in a position to appoint a maximum number of directors and Seksharia’s appointment as deputy chairman is not in an executive capacity.

According to officials at GACL, there is no change in the management at ACC and it will continue to be a professionally- managed company.

The selling of the Tata stake in ACC to rival GACL has re-written the rules of industry consolidation. However, industry specialists predict that, being a capital-intensive industry, several such consolidations amongst larger players are likely to take place in the near future if the domestic industry has to ward off foreign competition.
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MSEB stake in Dabhol dips to 16 per cent
New Delhi: The Maharashtra State Electricity Board (MSEB), which took a 30 per cent stake in the shareholding pattern of the Dabhol Power Co (DPC), will see its holding in the company reduce to less than half. This is because the state power utility was expected to buy into the company during Phase-II as well, which it did not.

As a result of this inability of MSEB to subscribe to phase-II of the company’s financial closure, the shareholding of Enron has risen to 64 per cent from 51 per cent previously. GE and Bechtel continue to each hold 10 per cent, while MSEB's stake is down to 16 per cent from 30 per cent. According to sources at DPC, MSEB may buy into the company in due course, thus reverting to its earlier position.

The question is whether MSEB can cough up the funds required to subscribe to the equity. In the first phase itself, the SEB had paid Rs 830 crore for a 30 per cent stake. It bought into the $1.1-bn power project via a subsidiary called Maharashtra Power Development Corporation. MSEB, which had been brought in as an equity partner in DPC by the then Shiv Sena government, has been facing some financial problems and is unlikely to buy into DPC.
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Engineering major, Dodsal, to set up Rs 350-cr Hazira-Dahej gas pipeline
Mumbai: Engineering and construction major Dodsal has bagged a Rs 350 crore project to set up a high pressure gas pipeline system between Hazira and Dahej, under a build, own, operate and transfer (BOOT) scheme that is being 100 per cent financed by ICICI.

The pipeline, which will carry gas from ONGC’s Hazira land point to Indian Petrochemicals Corporation Limited’s facilities, will be operated and maintained by Dodsal for 15 years.

To be completed in within 24 months, the pipeline will transport rich gas from Hazira and Dahej and lean gas from Dahej to Hazira. This is the second pipeline system to be set up on a BOOT basis in the country. The first, also financed by ICICI, was set up by Dodsal in 1997 for transportation of ethylene, propylene and naptha between Dahej and Baroda at Rs 145 crore.

Dodsal is a $200m multinational, with its international headquarters in Dubai and operates in over 18 countries. With a current order book of Rs 2,500 crore, the company has already built over 15,000 km of cross-country pipelines. It also has over 300 projects in 18 countries in the refinery, petrochemical, power, oil and gas facilities, fertiliser, hotels and highways business.
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Escorts enters the internet space through Esconet
New Delhi: With the launch of a 100 per cent subsidiary, Esconet, north India’s engineering major, Escorts Limited, made a foray in the internet space. The company will be headed by executive director Nikhil Nanda, with Rajan Swaroop as the CEO of the new outfit.

Esconet will further form four separate independent ventures in the area of mobile services, B2B marketplace, healthcare and ISP services. The company is looking for partners for the upcoming portals. The company believes that all these services would contribute to enhancing customer value and reducing cost in existing businesses.

The ISP initiative would be undertaken with group company, Escotel, and is likely to see an investment of Rs 25 crore.
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Thapar group may enter property development
Bangalore: With the group having prime property worth crore of rupees in cities like Delhi, Calcutta, Mumbai, Chennai and Bangalore, the Thapar Group plans to get into property development. According to Mr. Vikram Thapar, the group is looking at shopping malls with or without the base footprint of a multiplex, at apartment blocks, at possibly even hospitals. Each property will, he adds, be developed after first identifying what it will be best suited for. Mr. Thapar, however, did not specify any time frame in which the entry would be made.

Mr. Thapar hopes to bring in management efficiencies into property development. He said that the entry of recognised groups like the Thapars, would change the industry, which had been running on anachronistic lines, where the emphasis has been on making a quick buck and short-changing the customer.
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Honda to expand its market through small cities
Ahmedabad: In a bid to increase its sales in the country, Japanese car company, Honda Siel Cars India, is eyeing the markets in mini metros and other smaller towns. It also plans to gain an edge over its competition in the country by adding, two new models to its production list.

The company, which last year had a turnover of around Rs 700 crore, selling 9,698 cars, wishes to pass the Rs 1,000-crore mark by next year, according to Mr. Ananda Mohan Gupta, general manager, marketing.

As part of its strategy, Honda is planning to increase its dealer network to Goa, Amritsar, Surat, Bhubaneshwar and some parts of Delhi, while closing down some of its dealerships in places like Vijaywada, Cochin and Thiruvananthapuram.

While the company may also decide to produce the Accord and one more sports utility vehicle from India, it is very clear that it had no plans to launch a diesel version or entering the mid-size or small-sized car segment. This is based on the premise that the company prefers to be among the crme-de-la-crme of cars.

The company is also very clear that it will not increase its capacity indiscriminately, and plans to enhance capacity only by 25-30 per cent compared to last year.
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L&T to market products made by Eddy Currents
New Delhi: Chalakudy, Kerala-based and research driven, Eddy Currents and Control Ltd, the developer of an electric car, has entered into an agreement with Larsen and Toubro (L&T) to market the former’s indigenously developed products.

In addition to the electric car, Eddy has developed a hybrid auto (run both on petrol and battery) and a switched reluctance drive with several industrial and automobile applications. The technology related to switched reluctance drive was one of the three indigenous technologies funded by the Technology Development Board, and is to be dedicated to the nation on May 11. The new device is an alternative to DC series motors. It has high speed output and system efficiency.

The Chalakudy company also has an in-house research and development centre with a strong innovation focus. The company has demonstrated 4 Kv to 37 Kv drives for a range of industrial applications. It can also be used in electric vehicles. The TDB had provided soft loan of Rs. 1.15 cores out of the total development cost of Rs. 2.50 crore for the project, he said.
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Hindustan Lever targets to use AIM for Project Bharat II
Calcutta: As the company completes the first phase of its Project Bharat – a marketing initiative under which rural areas with less than 2000 population will be targeted -- India’s largest fast moving consumer goods (FMCG) company, Hindustan Lever Ltd (HLL), is set to begin its second phase, where it plans to expand its rural market base.

In phase one, which was started last year, the company focused on shoring up distribution, generating product trials and conducting brand awareness in rural centres with a population of over 5000.

Some of the key HLL brands such as Fair & Lovely, Clinic and Pepsodent were promoted in the hinterland under phase one.

In the second phase, AIM will be a major HLL brand launch along with some other products. HLL is also trying to study the success and replicate the pattern of its highly successful brand Lifebuoy in villages. The company plans a massive rural advertising campaign which will use public transport, walls, village schools, primary health centres and other rural bodies to spread its brands. HLL expects that many villagers will migrate to use of toothpaste from toothpowder. The latest brand of toothpaste from the HLL stable, Aim, will be a core product for its rural marketing strategy for which the company has earmarked nearly 40 per cent of its entire oral care ad budget.

The rural market size for toothpaste is estimated at Rs 500 crore per annum. This is expected to grow at thrice the rate of average six per cent urban market growth.

As per a HLL survey, India is set to witness three consumer mega trends, self-denial to affordable indulgence resulting from changing values and higher income; desire for quality time which will result in need for convenience; increased awareness about personal health & vitality, including rural India.

Besides the three mega trends, socio economic drivers will influence an "inflexion point in rural consumption" in the next decade. Hence the move to target rural India in a big way by popularising key brands.
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Mitsubishi and Hyundai may share car technology
Tokyo: Global rivals, Mitsubishi Motors and South Korea's Hyundai Motor may join hands in a global compact car project, originally initiated by Mitsubishi. The deal, however, depends on a seal of approval from Mitsubishi's partner, DaimlerChrysler, which agreed to buy a controlling interest of 34 per cent. Under Japanese corporate law, a 33.3 per cent holding gives DaimlerChrysler veto power in board decisions so the Stuttgart-based company's approval is essential.

The companies are trying to develop a common platform for their small car projects. Platforms, which usually consist of the floor pan and key engine and transmission components, are the basic building blocks of a car. A shared platform would make Hyundai a key partner in Mitsubishi and DaimlerChrysler's global car strategy.

Mitsubishi believes that the deal would not be a problem with the German car company, since, it would enable DaimlerChrysler and Mitsubishi to produce more vehicles, making for greater cost-competitiveness.
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Phoenix signs deal to buy Rover from BMW
London: German car major, BMW AG, handed over its Rover unit to Britain's Phoenix consortium on Tuesday for a nominal price of 10, thus securing its exit from the loss-making business and saving the UK's biggest car plant from closure.

BMW will also give the British consortium, 500 million in repayable credits to cover the costs of restructuring, including redundancy and pension payments. Phoenix, which won 200 m support from a US bank on Monday, will take over development, production and distribution of Rover Cars. It will acquire rights to the MG brand and other heritage brands, but not the Rover brand itself. Under the deal, Phoenix will take over production in Birmingham of the Rover 25 and 45, the MGF sports car and the current Mini, until the start of production of the new Mini.

While financial and auto analysts cheered the German company’s decision to sell off the "English patient", as the Rover subsidiary was labelled, BMW itself was pleased that it managed to find a buyer for Rover whose aim is to continue to run Rover and who will therefore prevent the loss of thousands of jobs in the Rover plant in Birmingham, in the supplier industry and in the retail business. Many analysts, however, questioned the long term existence of the erstwhile Rover plant under the Phoenix control.

Phoenix plans to shift production of the Rover 75 from Oxford to the Birmingham plant and intends to start production of the Rover 75 Estate in the near future. The Rover plant in Oxford, and the new Mini brand are not part of the deal, nor is the Land Rover brand, which is being sold to Ford Motor Co.

The British government may also provide some sort of financial aid for Phoenix, analysts believe, although Trade and Industry Secretary Stephen Byers said the group had not asked for any government subsidy.
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