The cellular churn - Birla AT&T set to bag BPL mobile !
Mumbai: The recently created cellular phone behemoth, formed by the merger of the Tata and Birla group’s cellular businesses, is likely to create waves in the Indian market. AT&T, which owns a one-third equity stake in the merged entity, has been recently approved by the Federal Communications Commission – the US governmental agency regulating such issues – to take over Media One.

Media One currently holds 49 per cent in BPL Cellular Holdings, the holding company for the BPL mobile business. With this, the rules of the game could easily change. The Birla AT&T-Tata combine would come to control Maharashtra, Gujarat and Andhra Pradesh. Following its buyout of Media One, AT&T would gain significant control over the circles of Kerala, Tamil Nadu and Maharashtra, which the BPL-Media One combine currently controls.

Presently, Tata Communications is being planned to be merged into Birla AT&T and all efforts are afoot to ensure that the best practices of both groups are adopted. While the management structure of the post-merged Tata-Birla entity is yet a secret, industry sources are already talking about a merger between the Tata-Birla entity and BPL Cellular, following the AT&T takeover.

It this were to happen, the combined entity would straddle the cellular footprint of this country and make it very difficult for others to reach.
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Gujarat Ambuja plans 100 per cent capacity hike
New Delhi: Apart from having aggressively acquired other companies, cement major, Gujarat Ambuja Cement Ltd, has drawn up a Rs 1,320-crore expansion plan that is likely to double its annual cement capacity from 8.5 million tonnes to 16 million tonnes. It plans to spend this money to enhance its existing capacity as well as set up greenfield facilities.

These capacity expansions will be carried out directly by GACL itself as well as by group companies — Ambuja Cement India Ltd and Ambuja Cement Eastern Ltd.

As part of its greenfield attempts, the company is setting up a two million tonne greenfield cement unit in Maharashtra with an investment of around Rs 500 crore. Group company ACIL too plans to set up a two million tonne greenfield unit at an undisclosed site with a capital outlay of Rs 500 crore.

The company’s plans for expansion are based on the fact that the demand for cement is likely to pick up substantially and the supply-demand mismatch, which has afflicted the cement industry for the last five years, is coming to an end. The company is, in fact, projecting a double-digit growth in the cement industry in the coming years.

At present, GACL and its subsidiaries and associate companies have an annual capacity of 8.5 million tonnes.
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LG hopes to make a splash in FMCG segment
Mumbai: After succeeding very well in the durables market, the South Korea-based LG Group is making a quiet entry into India’s fast moving consumer durables (FMCG) segment. It is reportedly test-marketing several of its products as a prelude to a fullfledged national launch, possibly sometime next year.

LG Chemicals has already begun test marketing skin care products like soaps in select markets in the country, and has already launched Cucumber, a popular LG soap brand, in some department stores in the south. The soap follows the establishing of LG’s brand in the baby-care segment with products like diapers. The products are currently being imported from Korea.

According to company sources, a national launch of LG personal care products is on the anvil by year end or beginning of 2001. The group will initially target the leading metros in the country and 20 `A’ class towns for the launch before getting into deeper pockets.

Company officials also stated that as they were present in niche areas currently, they do not directly compete with current heavyweights like HLL, P&G, Godrej Soaps and others.
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As Dresdner exits, group companies buy its stake in Tata AMC
Mumbai: The planned exit of Dresdner RCM Global Investor Holdings (UK) from that Tata Asset Management Company was completed with three Tata Group companies -- Tata Sons, Tata Investment Corporation and Tata Finance -- buying out the 20 per cent stake held by the foreign partner in the company.

Following the buyout the stake of the three Tata group companies in the asset management company will go substantially. The group has now broadened the talks for offering a minority shareholding in the asset management arm to three players including, AIG and Toronto Dominion Bank. While AIG is the partner for the Tata groups insurance foray, TD Waterhouse, a subsidiary of Toronto Dominion Bank, is the partner for its broking venture. Incidentally, TD Waterhouse group has a 49.90 per cent equity stake in Tata Finance Securities.
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Birla AT&T-Tata said to be in take over mood
Mumbai: The newly formed Tata-Birla combine for cellular phone services, is understood to be in talks with the RPG group to take over RPG Cellular and RPG Cellcom, the cellular telephony services providers in the Chennai and Madhya Pradesh circles. RPG Cellular had a 24,040-strong subscriber base as on December 31, 1999, ahead of the other Chennai operator, Skycell Communications, which had 22,960 subscribers. RPG Cellcom, which operates the Madhya Pradesh circle, had a 12,030 subscribers in December, way below the other operator in the circle, Reliance-Nynex, which had 18,140 subscribers.

Industry sources also state that the combine has also approached Aircell Digilink – which operates in the Haryana, Rajasthan and Uttar Pradesh (East) circles -- a part of the Essar group for a possible buyout. The Aircell Digilink operations in Haryana and Rajasthan have been closed for non-payment of license fees, though the UP (West) circle which is still operating had a base of 21,640 subscribers as of December. The other operator in the circle, Koshika Telecom, had 78,050 subscribers.

Besides the above, the combine is also eyeing Spice Communications to take over the latter’s operations in Punjab and Karnataka. Investment bankers feel that SpiceCom, which is working on the merger of its Calcutta, Punjab and Karnataka circles into a single company, might want to complete the exercise before it brings in a partner.

If all the talks fructify into deals, the Tata-Birla-AT&T combine would become the largest operator with a network spreading across the country.
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Escorts Limited lines up models for South
New Delhi: The specialised wetlands of the South that are used for rice cultivation, will soon see three new brands from the tractor major, Escorts Limited. The company is extending its Powertrac brands with straight axles as derivatives in the southern States of Tamil Nadu, Karnataka and Andhra Pradesh.

The planned launches are part of a strategy that Escorts has drawn up to corner more market-share in the South, where wetland cultivation is prevalent. The new tractors are expected to help the company leverage its Farmtrac brand, which already has considerable recognition in the southern States, said company sources.

Escorts is targeting sales of over 3,000 units of these straight-axle derivatives during the current year as compared to sales of about 1,800 units of the present Farmtrac 45 horse power (HP) achieved during the financial year 1999-2000 in these States.

These models also feature Carraro transmissions, which are being manufactured at the joint venture plant (Carraro India Ltd) in Ranjangaon, near Pune.

All the major players in the industry, with the exception of Escorts, registered low or negative sales growth. Mahindra & Mahindra, the market leader, achieved a growth rate of only 1.8 per cent, while Punjab Tractors, which had been registering record growth rates in the previous years, showed a growth of a mere 4.9 per cent in 1999-2000.
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Dell to set up base in Bangalore
Bangalore: The world’s second largest personal computer manufacturer, Dell International Inc, has decided to set up base in Bangalore, as part of its strategy to focus on the Asia Pacific region. The investment will be in excess of Rs. 100 crore.

Company sources confirmed having filed an application with the Foreign Investment Promotion Board (FIPB) for setting up a wholly owned subsidiary in India.

According to the FIPB application, Dell plans to set up a software promotion, computer consultancy and solutions, marketing and distribution of customised high technology computer system and storage devices in Bangalore.

Dell, which recently announced that it was focussing on the Asia Pacific region as it believed this was the fastest growing market, wants to capitalise on the technology and the productivity advantage of computing devices available in the region.

Dell has businesses across 38 countries across Asia with China being the fastest growing market for the company. The company has already invested over $ 800 million in over 90 technology start ups across the globe.

Dell designs, develops, manufactures, markets, services and supports the complete range of personal computer systems ranging from notebooks to workstations.
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Enron increases its grip by bidding for telecom network
Mumbai: US energy giant, Enron has bid for acquiring 51 per cent equity in Powergrid Corporation’s long-distance telecom network. The total investment for the project, which involves laying of optical fibre cable lines across the country, is estimated at Rs 5,000 crore.

The telecom venture will build infrastrcuture for the national long distance business, which would run parallel to the existing network of the Department of Telecommunication. Powergrid’s LDTN would also utilise its existing power transmission network as the backbone.

Enron Corporation had recently put in its bid in response to the international competitive tender floated by the state-owned company Powergrid. Enron has been evaluating several investment opportunities in India as part of expanding its telecom activities in India.

The long distance network project, initiated by the prime ministers office, is expected to begin work before the end of this year. The finer details, including the equity base of the company, will be decided by October this year.

The PMO’s office is said to be very keen that a dedicated parallel optical fibre network for long distance telephony should be implemented across the country by utilising the right of way of the Powergrid Corporation and the railways. The two entities already have their networks established.
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British Telecom and Vodafone plan to take over Airtel jointly
London: According to reports appearing in leading publications, British Telecommunications plc and mobile phone giant, Vodafone AirTouch plc, plan to join forces to take full control of Airtel, Spain’s second biggest mobile phone company.

Under the reported deal BT and Vodafone would control the Spanish company jointly by buying out stocks held by Spanish bank BSCH, which holds 30.45 percent of Airtel, and a group of smaller shareholders. BT currently holds 17.8 percent and Vodafone owns a further 21.7 percent of shares in Airtel.

The newspaper, quoting industry observers, said a deal could be announced as early as next week, valuing Airtel at about $22.46 billion.
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Fiat-GM deal hits speedbreakers
Turin: When it was announced in March, it was hailed as an imaginative new challenge to major car makers. But today doubts are mounting about Italian car major, Fiat SpA’s, deal with American giant, General Motors Corp..

Investors are increasingly getting nervous as financial analyts believe that the alliance, involving joint ventures in engines and components, is too loose to be effective. According to them this alliance, as it stands, is a car business exit strategy in disguise for the Agnelli family, which controls Fiat.

Fiat shares, which jumped 42 percent when the announcement was made, has been on the decline to a relative gain of less than 30 percent late last week.

GM, the world’s biggest car maker, and Fiat, number six in the world, stunned stock markets and their competitors with news in March that they planned to swap shareholdings and join forces in Europe and Latin America.

GM took a 20 percent stake in Fiat Auto. In return Fiat Auto took 5.1 percent of GM. The companies plan to slash costs by combining purchasing, and engine and transmission production. Doubts about the deal concern the lack of incisive action promised by this loose alliance. Analysts suspect the long-term rationale is a sellout by the Agnellis of their auto assets. They have strenuously denied this.
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Cadbury and Danone to bid jointly for Nabisco
London: According to newspaper reports in London, UK-based, Cadbury Schweppes Plc, and France’s Groupe Danone are set to make a 10 billion ($15 billion) joint bid for US-based Nabisco, the maker of Ritz crackers and Oreo cookies. The British company -- which has more than 3 billion in cash and debt available for acquisitions -- is said to be funding about 40 per cent of the acquisition price and the French company the balance 60 per cent.

The acquisition would give Cadbury Nabisco’s US sugar confectionery business, which includes the Lifesavers brand, while for Danone it makes strategic sense for the group to extend its reach into the United States. Danone is the world’s leading biscuit producer thanks to its domination in Europe and Asia, but it lacks a US foothold in cookies despite sizeable US interests in mineral waters and dairy products.

A total of 13 interested parties have already signed confidentiality agreements with Nabisco and a Cadbury-Danone joint bid would have to compete with other giants such as RJ Reynolds Tobacco Holdings, current favourite Philip Morris, as well as US financier Carl Icahn.
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