A V Birla group flagship company, Hindalco, has raised the basic price of aluminium ingots by Rs. 3,000 a ton. The company is also expected to effect a Rs 1,500 increase in the prices of its downstream products like foils.

After its formal takeover of Indal on June 27, Hindalco has become the country’s largest company with a capacity of 2.42 lakh tons per annum while Nalco comes a close second with a capacity of 2.30 LTPA.

The price revision comes close on the heels of the move by global majors Alcoa and Kaiser to cut their production. On June 18, Kaiser Corporation announced a temporary cutback in aluminium production at its Washington smelters by 128,000 tons, citing high energy costs.

In a similar move last week, the world’s largest producer Alcoa slashed production by 80,000 tons. In addition, two other US producers, Ornet and Vanalco, had also announced a reduction in their production by another 120,000 tons.

All this reduced the supply of the metal in the international markets and this was reflected on the London Metal Exchange. Aluminium rose 9 per cent after Kaiser’s move. On June 28, the metal closed at 1,579 a tonne, while on Friday it surged by another $8 to $1,587.

Despite the increase in prices the domestic prices will not be reflective of the LME trends, since there is a Rs 1,800 difference between the landed costs and the domestic price. Moreover, the two domestic producers also have the world’s lowest in production cost, at $850 a ton, compared to the world average of $1,100 a ton.
Back to News Review index page 

Global Telesystems warns of decline in revenues as it plans to exit select areas
New Delhi: The Rs. 625-crore Global Tele-Systems Ltd., which has seen fast growth in its revenue stream in the recent past, has warned analysts that there may be a slowdown in its revenue growth in the coming years as it divests certain existing businesses.

The company is contemplating exiting from product segments like packaged software, hardware business in network segment in the next few years. It is also planning to exit any business that has hardware content of more than 50 per cent and where the value addition from the project is less than a benchmark rate of 30 to 40 per cent. These divestments, if it takes place, will result in a decline in revenue growth and consequently impact the bottomline.

The company has, however, stated that it has put in place an action plan to compensate for the drop in revenues by generating additional revenues from the software, B2B and e-commerce segments. It, however, adds that there is no guarantee that these additional revenues will fully compensate for the loss in revenue in divestment. The consumer telecom business has already been hived off into a separate company.

Global Tele-Systems’ international sales have grown at a compounded annual growth rate of 95.89 per cent over the last two years and the company is projecting a substantial increase in its international sales in the coming years as well.

While in 1999-2000, international revenues at Rs 202.20 crore accounted for 28.70 per cent of the company’s total revenues, by fiscal 2003-04, international sales are projected to account for 40 to 50 per cent of total revenues.

Meanwhile, Global Tele-Systems has become almost debt free with a debt liability of only Rs 14.6 crore. The company is currently in talks with financial institutions for a premature repayment of these outstandings.

The virtual debt-free status will result in an annual interest saving of around Rs 30 crore and as the company is in a surplus cash situation, it is confident that its capital expenditure plans will be taken care of for the next two years without resorting to additional borrowings.
Back to News Review index page 

Ford to conduct due diligence of Daewoo’s India plant
New Delhi: The $162-billion Ford Motor Company, which has been selected as the sole bidder for the second round of negotiations for the takeover of the ailing South Korean automobile company, Daewoo Motors, will conduct due diligence of the overseas operations of Daewoo Motor, including its Indian venture. This will help Ford synergise its operations with Daewoo's in case a merger comes through.

It is said that senior officials from Ford will visit all plants and sites of Daewoo operations across the globe, including India, for conducting the due diligence.

Ford, which states that the bid for Daewoo is not to be viewed as a takeover but as a partnership, has decided to retain and try to grow the Daewoo brandname in the event that the takeover is consummated completely. The company provides its experience with Jaguar and Volvo as a case in point to prove its intention.
Back to News Review index page 

Sterlite draws up a Rs 800-cr expansion plan for telecom subsidiary
New Delhi: The Rs.3,000-crore Sterlite Industries announced that it would invest up to Rs. 800 crore over the next 5 years in its telecom company, Sterlite Communications, for increasing optical fibre manufacturing capacity in the country.

Announcing this, Mr. Navin Agarwal, director of the company, said that the company would fund the upcoming expansion through internal accruals and debt. This investment will result in the company increasing its optical fibre capacity to 10 million route kms. by 2005 from the current one million route km. The company will not invest any more funds in raising the capacity of its jelly filled cables business.

The company is planning to launch its optical networking and photonics operations in the country by November. It has also entered into a strategic alliance with global telecom major Alcatel to address telecom opportunities in India. This partnership is expected to provide turn-key networking solutions to create optical fibre bandwidth for convergence of technologies.

Sterlite had earlier initiated a corporate demerger to hive off its telecom business into a separate entity by September this year.
Back to News Review index page 

Ford plans to make India its IT-hub for Asia Pacific
New Delhi; The world’s second largest auto company, Ford Motor Company, has decided that it has chosen India as its hub for all IT initiatives for the Asia Pacific region.

As part this initiative, the company plans to set up an IT centre for "e-commerce solutions development, maintenance", which it plans to roll out in the Asia Pacific region by September.

For Asia, the company plans to develop e-commerce solutions to connect dealers and suppliers. The company is currently hunting for the right location, where the centre is to be located. The centre is expected to employ 200-250 professionals.

The project will entail investments worth an estimated $35 million though the final figure is yet to be firmed up. While the centre will start with an Asian focus, the company believes that there is enough demand and interest from Ford’s European and north American markets to make this venture more than Asia Pacific-centric.

What went in favour of India for establishing the centre was the country’s reputation in the IT field, its cost advantages and Ford India’s own IT preparedness.

Ford’s e-business ambitions are divided into four components: business to business which connects Ford to its suppliers; business to dealers; business to customers and Ford2Ford or B2E which comprises the in-house Ford intranet. In each of these four segments Ford has arrangements with third party software companies in the US for solutions. These solutions will be developed and piloted in the US but the team in India will customise them for the Asia Pacific region so they are interfaced with local systems.
Back to News Review index page 

Ranbaxy global plans on stream with Brazil JV to commence in October
New Delhi: India’s leading pharma major Ranbaxy Laboratories, announced that its joint venture in Brazil is to get off the ground by October this year. The company is bringing a second local partner into its Brazil joint venture. Ranbaxy will hold 50 per cent in the three-way partnership.

Ranbaxy is targeting sales of $150m from the US operations by 2002, over $500m globally this year, and is on course for $1bn globally by end-2004. India sales growth is expected to touch double-digits after a dull first quarter. The initiative is part of a globalisation strategy for Ranbaxy.

The joint venture, which will start by selling generics, and will add branded products from Ranbaxy to its portfolio by June 2001, is expected to contribute around $7 million in calendar 2001. The new company could set up packaging and formulating facilities or use those of the Brazilian partners on a third-party basis. Ranbaxy’s initial investment is $2m plus funds for working capital.

Ranbaxy has recently acquired a steroid brand with annual sales of $5m in the US from American Generics.
Back to News Review index page 

Oberoi hotels join Cathay Pacific rewards program
Mumbai: India’s leading hotel company, the Oberoi Group of Hotels and Resorts, and its group company, Trident Hotels, have joined the Asia Miles Travel program, the travel reward program launched by Cathay Pacific in February 1999.

Besides earning 500 points each time they choose to stay with the Oberoi group of hotels, the reward plan members can also get access to other benefits like, 15 per cent discount on rooms and suites, upgrades with-in specified room category, late check-outs, early checkins, complementary tea and coffee and 15 per cent discount on airport lounges and snack bars of The Oberoi group.
Back to News Review index page 

Hyundai may export Santro, Accent to European and African markets
Bangalore: The two product offerings from Hyundai Motors India, the Santro, and the subcompact coupe, Accent, may soon be seen on European and African roads. The cars, which are already being exported to neighbouring Saarc countries, has generated a lot of interest in European countries.

The company, which already exports engine and transmission parts of Santro and Accent to its parent unit in Korea and other countries, is now planning to export fully built units to give it a three-fold increase in its exports.

In an attempt to boost its dealers in India, the company is taking all its 81 dealers and middle and top management brass of the company, to Los Angeles to get a first hand experience of business done by some of the largest car dealers.

The week-long affair is the second such exercise by Hyundai. Last year, dealers were shown the manufacturing facilities in Seoul before being taken to dealer showrooms in Bangkok and Singapore.
Back to News Review index page 

Tata-Birla AT&T merger runs into roadblock
Mumbai: The proposed merger between Tata Cellular and Birla AT&T – that could have potentially created the largest cellular operation in the country -- has rammed into an unexpected roadblock with the American Investors Group (AIG), a 10 per cent minority shareholder in Tata Cellular, expressing its unwillingness to exit the venture.

While the Tatas have been negotiating with AIG for buying out the latter’s stake for over two months now but AIG, it is learnt, wants to stay in the project in view of the dominant presence the merged entity is likely to have.

AIG’s insistence has put the Tatas in a spot, since the memorandum of understanding the company had with the other partners in the cellular plans – the AV Birla group and AT&T – envisages the three partners holding an equal 33.33 per cent share in the merged entity. As a result of this mou, there is no place for AIG in the merged entity.
Back to News Review index page 

Wipro to hive off peripherals arm into separate entity
Bangalore: In an attempt to allow entrepreneurial talent to get strategic investment and grow the volume driven product business, Wipro Ltd has spun off the peripherals division of Wipro Infotech and restructured it as a separate legal entity.

The new company, Wipro ePeripherals, will focus on marketing of computer peripherals. In a press release the company has said the changes will take effect from August 1, 2000, and the decision was subject to approval by the shareholders at the next annual general meeting of the company.

The new, primarily employee-owned and employee-managed company, will have an independent board of directors. The new company will be headed by Mr. Ram N Agarwal as managing director and chief executive officer, and Wipro Ltd will have 39 per cent ownership in the new company.

According to Mr. Arun Thiagarajan, vice chairman of Wipro, the new company will Wipro ePeripherals to become a dominant player in the market, while allowing Wipro Infotech to focus on our comprehensive IT services and solutions for customers.
Back to News Review index page 

Welcomgroup set to rationalise hotel tariffs across group properties
Calcutta: The Rs 400-crore hospitality chain run by cigarette giant, ITC, under the brand Welcomgroup, is said to have initiated steps to rationalise hotel-room tariffs across all its properties. The move is aimed at bringing the rates in line with market realities and making the hospitality chain competitive compared to its counterparts in neighbouring south-east Asia.

The rationalisation exercise is to be kicked off on Septermber 1, the traditional date on which the Welcomgroup enforces changes in tariffs as an annual happening. The company will take to ensure that the gap between the dollar and rupee rates will be bridged. This exercise, according to the hotel sources, will help dispel the impression, both domestically and abroad, that hotels in India are over-priced.

Hotel tariffs in India rose during 1995-96 and in the following year, because of critical accommodation shortages in metropolitan cities like Delhi and Mumbai caused by economic reform which caught the industry and government unprepared. Although in the succeeding years, the pressure on rooms eased out on the back of drop in arrivals of upmarket visitors and with hotels adjusting tariffs in negotiated business.

However, rack rates remained untouched. As a result, tourism bodies have been making persistent recommendations to formalise the gap between published rates and the rates that are actually charged, as this gap has been sending wrong signals about Indian hotel prices.
Back to News Review index page 

Philips may team up with Asian partners in mobile foray
Amsterdam: Dutch electronics giant, Philips, is said to be seeking an alliance with an Asian manufacturers of mobile phones, like Panasonic and Samsung, to strengthen its handset business. It is believed that such an alliance will help the company bridge a "six to nine month gap" the company perceives it has with its main competitors. Philips currently ranks seventh or eighth in the market, with about six per cent of GSM sales and 3.5 per cent under all standards worldwide, the report added.

Philips chairman Cor Boonstra has identified mobile phones as a high priority sector for the group
Back to News Review index page