The Guardian from London, Greater London, England • 19

FINANCE AND ECONOMICS 1 21 The Guardian Wednesday May 8 1996 BP spurts ahead in spite of price war Ian King tic gas market, being tested in the South-west, aimed at allowing consumers to shop around for the best supplier. He said: "BP can supply gas to a wider number of customers and improve the quality of their service. Clearly, it is a growing market, and quality suppliers who understand marketing will have advantages." But Mr Browne said the changes had complicated BP's negotiations with British Gas over so-called "take or pay" contracts signed the late 1980s. British Gas is seeking to renegotiate terms on gas it bought at high fixed prices, mainly during the 1980s but which it was later unable to sell on to consumers. "Discussions with British Gas are continuing, but what will happen in the domestic market is uncertain to everyone," he said.

Despite the improvement in profits, analysts said the City had grown used to BP beating its targets and reacted with disappointment at its failure to increase the interim dividend. Shares closed down I3p at 569p. Responding to criticism over the dividend, Sir David said the first quarter stage was not a point to review dividend policy and indicated that an increase could be made at the half-year stage. He said: "We look at the Petroleum yesterday underlined the impact of "the petrol price war by warning that despite stable crude oil prices, it expects the battle of the forecourts to continue in the near future. Announcing a 36 per cent improvement in first quarter pre-tax profits to 629 million BP's best first quarter figures for a decade group chief executive John Browne said BP, like its rivals, had been hit by the price war.

BP ran up marketing and refining losses of 4 million in Britain during the three months, against profits of 16 million for the same period last year, which Mr Browne said was due largely to competitive pressures. However, he said BP had improved its market share during the price war, and promised the group would continue to fight its corner. But Mr Browne denied BP had received a favour from Esso, which started the price war with its Price Watch campaign in January, and played down suggestions that the strategy for BP and other big oil companies was to wipe out independent rivals. He said: "Many people have tried to move prices up over the last few months, so something must be happening. Our market share is improving, and we will continue to be there.

But there are still too many service stations in Britain." Meanwhile, the chairman, Sir David Simon, insisted that the better-than-expected profits had come almost entirely from Bp's own efforts, rather than from increased oil prices. He said half of the improvement was due to cost savings. The rest was due to higher volumes, with demand for gas particularly buoyant during an unusually long, hard winter. Sir David highlighted opportunities from proposed changes to the British domes News in brief Barb, in Bihar state keeps an eye out for violence during India's general election PHOTOGRAPH: JOHN MOORE Poll patrol a policeman at India to the market OUTLOOKSuzanne Goldenberg reports on how the prospects for the poor might improve with itself raj, the planned economy and tortuous red tape of the past. "A tacit national consensus is emerging that we do need areas of foreign investment, and especially in infrastructure," Vishwanath Pratap Singh, a former Indian prime minister and Janata Dal leader, said.

"The international reality is that the world economies are integrating whether Indians like it or not. We have to accept that we are too big to insulate ourselves from this process." India's outgoing finance minister, Mafimohan Singh, has estimated the country wiU.need to.invest $200 billion (135 billion) in infrastructure over the next decade, and there is a broad acceptance that the money will come from abroad. The ruling Congress party has has said it will introduce reforms promised in its manifesto. The right-wing Hindu chauvinist Bharatiya Janata party, which is widely fore Hindu extremists, the left and environmentalists in the self-reliance movement. BJP extremists have been at the forefront of the occasionally violent campaigns against the entry of multinationals, including the sacking of the first Kentucky Fried Chicken franchise at Bangalore in January.

However, the restaurant has re-opened, and is doing a roaring business under armed guard, and a spokesman for KFC said it was looking for space to open a second outlet in the city. And the western states of Maharashtra, where the BJP is part of the governing coalition, and of Gujarat, where it rules in its own right, have been quick to open up to investors. While Maharashtra scrapped a $2.8 billion power project by the US firm Enron Development last summer, it renegotiated the deal on more advantageous terms. Since then, the southern state of Karnataka has smoothly Exchange seat sold in 1.45m deal A SEAT on the New York Stock Exchange sold for $1.45 million (966,000) yesterday, topping the previous high of $1.25 million on March 8. Rising seat prices are usually associated with high sells among men here is barely 25 per cent, and Mohammed Alerasool, a teacher at the local college, said his daughters are the only women in the village of 15,000 to progress beyond primary school.

But it is a measure of the broad acceptability of the market reforms which India introduced in 1991, that Mr Yadav had to pay tribute to foreign investment, even in places so remote that liberalisation has had little impact. India's reform programme has remained in the background in the campaign for general elections, where voting in all but a handful of seats wound up yesterday. While there is concern in the local as well as the international community that the coalition government which is expected to emerge by mid-May may be too weak or too unstable to push through reforms, it is generally acknowledged that India will never return to the licence may fail in the needed. fund would be A Lloyd's spokesman said he was confident that Lloyd's would pass the solvency tests when they are carried out in August. He said that the report's figures were already out of date.

If there was still a shortfall in August, it would be met by allowing Lloyd's to add in its net assets. This would include the market's futuristic Lime Street headquarters which Lloyd's still owned at the end of 1995, even though it was sold in February. The spokesman said that the financial pressure on Lloyd's would be significantly relaxed if the settlement deal Leisure flying markets. Previously, seats dividend over the course of the entire year, and the interim stage is very much the appropriate time to review things." Elsewhere, Mr Browne said BP expected oil to continue trading at between a barrel over the next few months but said he expected Utile news on the possibility of Iraq resuming oil exports in the near future. Talks with Iraq were due to restart last night, but Mr Browne said: "People change their minds the whole time, but my personal opinion is that it will not get solved just yet and that we are no closer to a solution than in the past." sold for $1.25 million in March its stake in Societe Francaise du SFR to up to 20 per cent by the end price.

overseas shareholdings wher ready to publish regulations on and February. Betore that. $1.15 million was paid in September 1987 about a month before the stock market crashed. Owning a NYSE seat confers membership, giving the holder the right to trade stocks and vote in exchange meetings. There are 1,366 seats on the NYSE, a number fixed since 1953.

Yesterday's price reflects the stock market rally that saw the Dow solvency test Jones industrial average rise about 42 per cent since the start of 1985. The exchange does not release the names of buyers and sellers. Bloomberg French connection Chiroscience on Price index 'May' Jun1 Jul 'Aug 'Sep' Oct Source: DMstniim VODAFONE Group said it raised Radiotelephone, a French mobile phone company, to 16.5 per cent from 10 per cent. The transaction is valued at Kfr2.3 billion (296 million). On July 29, Vodafone will pay about 11.84 billion in cash and will make a further cash payment of Ffr467.4 million on July 29, 2001 for the raised stake in SFR.

Vodafone has the with the Names goes ahead this summer. Lloyd's chairman, David Rowland, whose annual salary was unchanged last year at 450,000, said in the report: "We are seeking to improve the offer in various ways." Mr Rowland, who has agreed to continue as chairman to the end of 1997, is expected to write to the Names next weekend giving more details of this improvement. Not only is the original 2.8 billion expected to be increased to more than 3.1 billion, but the cost to the Names of setting up Equitas, the reinsurance company which is taking over the old liabilities, is expected to be inward investment given its approval to a $1 billion dollar Cogentrix power plant. Hyundai and Ford are to build car plants in neighbouring Tamil Nadu. While 1995 saw a slowdown of direct foreign investment as businesses wait to see what kind of government emerges, portfolio investment has been flowing in.

Since January, more than $1 billion has been invested in Bombay's stock markets, and analysts expect an additional $3 billion by the end of the calendar year. The figures compare well with a total of $5 billion dollars in portfolio investment from -1993 to-1996. Analysts say this reflects a belief in the fundamentals of India's economy: a 6.2 per cent growth rate, a 10 per cent industrial growth rate and corporate profits of 25 to 30 per cent. But there is concern that a weak government could not address the country's fiscal defict, so increasing inflation. the up 'Nov' Dec1 Jan 'Feb' Mar1 Apr 'May company was spending 1 million a month on drug development, but that the new cash might be the last it needed to raise before its products started to hit the market.

Mr Padfield said that the European biotechnology sector was full of loss-making firms, each racing products to market before their development cash ran out. "There is nothing worse than having only three to six months' money. It places companies at a disadvantage when negotiating with larger pharmaceutical companies," he said. Chiroscience is focusing on "chiral" drug development, purified versions of established drugs, and other projects. Chiroscience whose losses rose from 9.3 million to 11.6 million in the year to the end of February needs to increase its monthly expenditure to cover commitments to its levobupivacaine local anaesthetic.

The group also announced the 5.5 million acquisition of a pilot-scale development facility from Merck of Germany which will help Chiroscience respond more quickly and effectively to the requirements of its clinical trials. option to increase its holding in or next year at tne same per-share "Our strategy is to increase our IN a village on the eastern edges of India, where the lives of the poor have only a passing acquaintance with the 20th century, La- loo Prasad Yadav was rattling off the names of foreign countries like an incantation. I have been to Singapore, to the United States and to the UK," India's most charismatic peasant leader and chief minister ofIndia's second largest state told the sea of expectant faces. And everywhere he went. Mr Yadav said, he found busi ness people eager to invest in his native Bihar.

He had travelled far and he.said, and this would assure their prosperity. The crowd cheered. But, given the level of corruption and lawlessness in Bihar, the fact is that nobody is investing there. Like Mr Yadav, or Laloo as he is universally known, most of the people in Salmari village belong to poor, peasant families. The literacy rate Lloyd's Pauline Sprlngett LLOYD'S, the insurance market beset by litigious Names and huge losses, might fail government solvency tests later this year, according to figures contained in the insurance market's 1995 annual report published yesterday.

The report shows that Lloyd's central fund which can be used to allow the Names to pass their Department of Trade and Industry solvency tests contained just over 540 million at the end of December. But the report says about 1 billion nearly double the amount Stanley Ian King STANLEY Leisure, the casino and betting shop operator, is expected to confirm later this week that it is buying Gus Carter, the struggling Sunderland-based bookmaker, for around 13 million. Liverpool-based Stanley, Britain's fourth biggest betting chain, remained tight-lipped yesterday after Gus Carter confirmed that negotiations were at an "advanced The deal would give Stanley, which owns more than 400 betting shops across the country, a presence for the first time in the North-east, where Gus Carter owns 72 betting shops, and where the group is a household name. Gus Carter's fortunes have been nothing short of disastrous since its flotation in May last year. Like other bookmakers, Gus Carter has been hit hard by competition from the National Lottery, and particularly from the introduction of scratchcards.

At the same time, punters have responded to the intro- cast to win the most seats though that is no guarantee it will be able to form a government has said it is in favour of foreign investment hi infrastructure and hi-tech industries. While the Communist Party of India (Marxist) has called for the rolling back of reforms. West Bengal, where it holds power, has been aggressively pursuing foreign investment. LIKE his counterparts in other Indian states, the communist chief minister of West Bengal, Jyoti Basu, has travelled to Iher.Wesfc to, seek investment. The" loosening of central economic controls and the rise of regional parties in India means that process will continue no matter what government comes to power in New Delhi.

However, there is opposition to the entry of multinationals in the consumer goods sphere. This has united around 1 billion, rather than the 1.9 billion initially feared. Lloyd's efforts to persuade the Names to accept the deal were boosted yesterday by a High Court ruling which said the market did have the right to force Names to pay claims which had been paid on their behalf by the central fund. A Lloyd's spokesman said he hoped the ruling would encourage Names to accept the deal. He warned that those who rejected it would be pursued for payment.

However, a spokesman for the Writs Response Group, which sponsored the case, said the ruling would be appealed. Mark of Esteem as it took the photograph: Fiona Hanson around 80p, allowing original investors to get out without making a loss. Last night, Gus Carter shares closed up 6p at 84p, while Stanley shares closed unchanged at 475p. The acquisition of Gus Carter would give Mr Steinberg the last laugh over the Tre-whitt family, which still has a controlling stake in the group, and which snubbed him last year. ever possible," Gerald Whent, chief executive of Vodafone, said in a statement Bloomberg Big spender to inject 40m more Young save for future ALMOST half of UK teenagers are planning ahead by saving more than they spend, according a survey published today by the Halifax Building Society.

It says that thrift is fashionable for 43 per cent of all 1617-year-olds, up from 28 per cent last year. Teenagers can hope for an average 10.80 pocket money from their parents. Young Halifax savers will receive a bonus worth 10 per cent of their balance when the society becomes a bank early next year. Cliff Jones to get Carter Gummer admits delay ENVIRONMENT Secretary John Gummeryesterday admitted that the Government was still not me recycling oi pacnaging wnicn are required Dy tne European Union Packaging Directive to be in place by the end of next month. After years of negotiations, industry representatives have agreed now the total recycling obligation will be divided between four sectors of the packaging chain, with just under half being met by retailers.

But Sir Peter Parker has been asked to chair an advisory committee which will try to hammer out detailed regulations. Mr Gummer said he hoped to publish the draft regulations "in the near Roger Cowe TONY MAY examines a star of Britain's emerging biotech sector CHIROSCIENCE, one of a handful of fledgling biotechnology companies which have soared in value on an enthused stock market, yesterday sought to secure finance for the next three years by asking for 40 million from shareholders. The share issue, which was signalled last month, will give shareholders the right to buy one share at 410p for every seven held. About 10.3 million new shares will be sold. Noting the rocketing value of the sector leader, British Biotech, over four years, investors have piled into other shares in the sector and the British industry is now second only to the US's in size.

News of the fundraising sent Chiroscience shares up 7.7 per cent to 490p, a gain of 35p a share, amid a general rise in biotechnology stocks. John Padflcld, the chief executive, said that the MAID visits hotel rooms SHARES of MAID, the online information services group, jumped 23p to Z45p yesteraay alter tne company announced it bad won a contract to provide online business information to Granada's 355 Forte hotels. Under the terms of the deal, MAID will provide guests at the hotels with business information on the internet, enabling them to access the information from their hotel room. Ian King Only one winner Bookies across the land paid out on 2000 Guineas at Newmarket on Saturday duction of evening and Sunday racing without enthusiasm. Meanwhile, sentiment is growing that, with the onslaught from the National Lottery, there is room for only a few large bookmakers.

Competition is also expected to intensify later this year with the flotation of William once part of the Brent Walker empire, which is likely to be a stronger mar ket player as a separate entity. The Gus Carter group has been touted in the City as a takeover candidate since October when its shares, floated at 80p a time, crashed to 52p after a profits warning. It is thought Stanley's chairman and founder, Leonard Steinberg, who has a reputation as a tough negotiator, will pitch his bid for Gus Carter at Business park planned UP TO 4,000 jobs could be created in south Manchester over the next decade with the development of a 49-acre business park at Wythenshawe, joint developers Manchester City Council and Arlington Securities said yesterday. Their pooled land holdings will form Manchester Airport Business Park, with the aim of attracting leading companies in the computer, electronics and light manufacturing sectors to the airport's internaUonal door- step. Graham Stringer, council leader, said aims included maxi-mislng local Job opportunities.

Martyn Halsall.