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Date: Tue, 10 Jul 2001 15:25:00 -0700 (PDT)
From: j.kaminski@enron.com
To: vkaminski@aol.com
Subject: FW: From The Enron India Newsdesk - July 7-9th newsclips
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 -----Original Message-----
From: =09Kohli, Sandeep =20
Sent:=09Monday, July 09, 2001 8:31 AM
To:=09Kaminski, Vince J
Subject:=09FW: From The Enron India Newsdesk - July 7-9th newsclips

Vince,

This makes interesting reading.

Regards,
Sandeep.

 -----Original Message-----
From: =09Varma, Nikita =20
Sent:=09Monday, July 09, 2001 5:46 AM
To:=09Varma, Nikita
Subject:=09From The Enron India Newsdesk - July 7-9th newsclips

THE ECONOMIC TIMES
Monday, July 09, 2001, http://www.economictimes.com/today/09econ07.htm
Enron chairman coming today, Girish Kuber=20
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BUSINESS STANDARD
Monday, July 09, 2001, http://www.business-standard.com/today/news.asp?Menu=
=3D67#4
Enron brass positive on resolving dispute, chairman to meet FM today=20
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THE FINANCIAL EXPRESS
Monday, July 09, 2001, http://www.financialexpress.com/fe20010709/news2.htm=
l
Enron chairman to hold talks with Vajpayee, Sinha, Prabhu Sanjay Jog

The above article was also reported in the following newspaper:

THE TIMES OFINDIA
Monday, July 09, 2001, http://www.timesofindia.com/today/09busu6.htm
Enron chief to discuss Dabhol with Prabhu=20
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THE TIMES OF INDIA
Monday, July 09, 2001, http://www.timesofindia.com/today/09busu7.htm
Enron India chief optimistic about Dabhol=20
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THE ECONOMIC TIMES
Monday, July 09, 2001, http://216.34.146.167:8000/servlet/Form
Judicial probe sought into Enron imbroglio
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THE TIMES OF INDIA
Monday, July 09, 2001, http://www.timesofindia.com/080701/08busi8.htm
BJP favours judicial probe into Enron controversy=20
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THE ECONOMIC TIMES
Monday, July 09, 2001, http://www.economictimes.com/today/09infr03.htm
Privatise MSEB generation, distribution: Panel

The above article was also reported in the following newspapers:

BUSINESS STANDARD
Monday, July 09, 2001, http://www.business-standard.com/today/economy7.asp?=
Menu=3D3
MSEB should be privatised, says Godbole panel
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THE TIMES OF INDIA
Monday, July 09, 2001, http://www.timesofindia.com/today/09busi5.htm
Godbole panel recommends privatisation of MSEB=20
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MID DAY,=20
Monday, July 09, 2001, http://www.chalomumbai.com/asp/article.asp?cat_id=3D=
29&art_id=3D12941&cat_code=3D2F574841545F535F4F4E5F4D554D4241492F5441415A41=
5F4B4841424152
Dabhol employees sure company will pull out, Deepak Lokhande
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MID DAY
Sunday, July 08, 2001, 1http://www.chalomumbai.com/asp/article.asp?cat_id=
=3D29&cat_code=3D2f574841545f535f4f4e5f4d554d4241492f5441415a415f4b48414241=
52&art_id=3D12925
Villages suffer with Enron shutting shop
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THE ECONOMIC TIMES, Monday, July 09, 2001
Enron chairman coming today, Girish Kuber=20
=20
THERE would be renewed efforts to resolve the Dabhol dispute with Kenneth L=
ay, the high profile chairman of Enron Corp, arriving in Delhi tomorrow. Mr=
 Lay is scheduled to meet Prime Minister Atal Bihari Vajapayee and finance =
minister Yashwant Sinha, besides power minister Suresh Prabhu. He will disc=
uss the fate of Dabhol Power Company which is locked in a dispute with the =
MSEB. According to central government sources Mr Lay will take up the issue=
 with none other than the Prime Minister and finance minister during his st=
ay in Delhi. His itinerary remains a closely guarded secret with Enron offi=
cials unwilling to share any information on the issue. However, according t=
o government sources Mr Lay's office had got in touch with the PMO to confi=
rm the meeting. Mr Lay, flying in his Gulf Stream, would be reaching Delhi =
tomorrow. He is coming to India at a time when around six states have shown=
 interest in buying the Enron power. However, these states are interested o=
nly if Enron makes it available at around Rs 2.50 per unit - which is unacc=
eptable to the company.=20
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BUSINESS STANDARD, Monday, July 09, 2001
Enron brass positive on resolving dispute, chairman to meet FM today=20

Wade Cline, chief executive of the Indian operations of Enron Corp, said to=
day in New Delhi that he was optimistic about working through the payment d=
ispute with MSEB."There are a variety of options, and we are trying to work=
 out solutions," he said after a meeting with the finance secretary."We are=
 having good meetings with the ministry. So, we are optimistic," Cline said=
. He added he had briefed the finance secretary ahead of the meeting of Ken=
neth Lay, chairman of Enron, with finance minister Yashwant Sinha. Lay is a=
lso due to meet power minister Suresh Prabhu and other senior officials tod=
ay in connection with the payment dispute between Enron's Dabhol Power Comp=
any and MSEB.
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THE FINANCIAL EXPRESS, Monday, July 09, 2001
Enron chairman to hold talks with Vajpayee, Sinha, Prabhu Sanjay Jog

The Enron chairman Kenneth Lay, during his closely-guarded India visit, wil=
l hold talks with the Prime Minister AB Vajpayee, the Union Finance Ministe=
r Yashwant Sinha, Union Minister for Power Suresh Prabhu and some of the up=
country contacts. Mr Lay, during his short visit commencing from late Sunda=
y night, may also hold talks with the Congress president Sonia Gandhi and v=
arious political and business leaders in New Delhi. Informed sources told T=
he Financial Express that efforts are on to organise a meeting with the Mah=
arashtra chief minister Vilasrao Deshmukh and his colleagues in the ministr=
y.The Dabhol Power Company (DPC) declined to give details about Mr Lay's vi=
sit. "We don't want to comment," said its spokesman Jimmy Mogal. Mr Lay's v=
isit deserves special significance, especially when the Maharashtra State E=
lectricity Board (MSEB) has stopped power purchase from DPC since May 29, a=
fter issuing a notice to rescind its power purchase agreement with DPC. MSE=
B has also got shot in the arm when the Mumbai high court dismissed a writ =
petition filed by the DPC challenging the jurisdiction of Maharashtra Elect=
ricity Regulatory Commission to adjudicate upon its dispute and difference =
with MSEB.

Mr Lay, who alongwith DPC's former chief executive officer Rebecca Mark had=
 convinced the necessity for survival of Dabhol project to the previous Shi=
v Sena-BJP government in 1996 and 1998, may have to make similar efforts ag=
ain. Mr Lay in early May had made it clear that "India can illafford the ve=
ry public fight the Dabhol has become. It sends a bad signal to the rest of=
 the world as to the difficulties of investors in India, which is not what =
India needs right now." Mr Lay further said that "India needs a lot of fore=
ign investment if the country expects to build up its infrastructure." Howe=
ver, Mr Sinha had contested Mr Lay's claim and said that "there is no need =
for us to think that because there is a problem with Enron, it is necessari=
ly going to act as a dampner to foreign direct investment.Mr Lay's visit is=
 also crucial, especially when the the Congress president Sonia Gandhi duri=
ng here recent US visit has assured the American leadership that the Congre=
ss-led government in Maharashtra will make every effort to amicably resolve=
 the Enron controversy. The former union finance minister Dr Manmohan Singh=
, who was accompanying the Congress president, had told the US leadership t=
hat the effort now is to find an amicable and mutually satisfactory solutio=
n based on purely economic and business considerations.

Meanwhile, DPC has relaunched an advertisement campaign entitled " why do I=
 then write to you today?" coinciding Mr Lay's visit. However, the anti-Enr=
on lobby is quite amused to see the ad campaign as it alleged that the DPC =
is misleading the people. According to a senior leader of anti-Enron moveme=
nt, it clearly shows that Enron had minted money during its operation since=
 may 1999 and it has funds to spend on ad campaign, especially when the pow=
er generation has been closed since May 29. The anti-Enron lobby is expecte=
d to press for the judicial probe against Dabhol deal at the coordination c=
ommittee meeting of the constituents of the ruling Democratic Front schedul=
ed for July 11.=20
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THE TIMES OF INDIA, Monday, July 09, 2001
Enron India chief optimistic about Dabhol=20

The chief executive of Enron Corp's Indian arm said on Monday he was optimi=
stic about working through the company's payment dispute with a local utili=
ty. "There are a variety of options facing us with the project. We are just=
 trying to work through those," Wade Cline told reporters in the Indian cap=
ital after a meeting with the finance secretary. "We are having good meetin=
gs with the ministry, so we are optimistic," Cline said. He added he had br=
iefed the finance secretary ahead of Enron Corp Chairman Kenneth Lay's meet=
ing with Finance Minister Yashwant Sinha. Lay is due to meet Sinha, the pow=
er minister and senior officials in connection with the payment dispute bet=
ween Enron's Dabhol Power Co and the Maharashtra State Electricity Board wh=
ich has defaulted on payments of $48 million to Dabhol. Enron's project is =
the largest direct foreign investment in India. Its first phase of 740 MW w=
as completed in 1998, while a second phase adding another 1,444 MW was almo=
st complete when its contractor stopped work because of the dispute. (Reute=
rs)
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THE ECONOMIC TIMES, Monday, July 09, 2001
Judicial probe sought into Enron imbroglio
=20
THE STATE executive of the BJP in Maharashtra on Saturday passed a resoluti=
on favouring a judicial probe into all aspects of the 'controversial' agree=
ment signed between the state government and the US energy major Enron. The=
 resolution is perceived by political analysts as a move aimed at forcing t=
he DF government to agree to a judicial probe into the Enron issue even tho=
ugh the ruling DF coordinating committee had earlier deferred a decision on=
 the question to July 11. At a closed door meeting held at Dombivali in Tha=
ne district on Saturday, the BJP state executive stated that "it had nothin=
g to hide and is in favour of a judicial probe." The resolution also lambas=
ted the DF government for 'playing politics' and "trying to settle scores w=
ith the NCP chief Sharad Pawar," according to BJP spokesman B Atul. "If the=
re is a demand for a judicial enquiry into the Enron issue, the BJP is not =
opposed to it," he said. The change in the BJP's stand on the Enron issue a=
t this juncture is significant as the BJP national vice president Gopinath =
Munde had earlier opposed a judicial probe in the matter.=20

Coming down heavily on the ruling DF government for raking up old issues an=
d pressing for reversal of the names of Sambhaji Nagar and Dharashiv to the=
ir original names, Atul alleged "the government is practising revengeful po=
litics." Flaying the DF government for adopting a communal overtone, the re=
solution further stated that the state government's attitude is aimed at di=
sturbing the social harmony of the state. The BJP's changed stand on contes=
ting the local self-governing bodies election also figured at the meeting w=
hich passed a resolution calling for an alliance with the Shiv Sena during =
the zilla parishad and civic elections, deviating from its earlier stand of=
 '100 per cent bjp', Atul said. Around 300 party workers, including BJP lea=
ders, Gopinath Munde, Union ministers Ram Naik, Pramod Mahajan and Jaywanti=
ben Mehta were among those who attended the meeting, presided over by the s=
tate BJP president, Pandurang Phundkar. The meeting will conclude on Sunday=
, Atul added. (PTI)=20
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THE TIMES OF INDIA, Monday, July 09, 2001
BJP favours judicial probe into Enron controversy=20

The state executive of the BJP in Maharashtra on Saturday passed a resoluti=
on favouring a judicial probe into all aspects of the controversial agreeme=
nt signed between the state government and the US energy major Enron. The r=
esolution is perceived by political analysts as a move aimed at forcing the=
 DF government to agree to a judicial probe into the Enron issue even thoug=
h the ruling DF coordinating committee had earlier deferred a decision on t=
he question to July 11. At a closed door meeting held at Dombivali in Thane=
 district on Saturday, the BJP state executive stated that "it had nothing =
to hide and is in favour of a judicial probe." The resolution also lambaste=
d the DF government for 'playing politics' and 'trying to settle scores wit=
h the NCP chief Sharad Pawar,' according to BJP spokesman B Atul.=20
"If there is a demand for a judicial enquiry into the Enron issue, the BJP =
is not opposed to it," he said. The change in the BJP's stand on the Enron =
issue at this juncture is significant as the BJP national vice president Go=
pinath Munde had earlier opposed a judicial probe in the matter. Coming dow=
n heavily on the ruling DF government for raking up old issues and pressing=
 for reversal of the names of Sambhaji Nagar and Dharashiv to their origina=
l names, Atul alleged, "the government is practising revengeful politics." =
Flaying the DF government for adopting a communal overtone, the resolution =
further stated that the state government's attitude is aimed at disturbing =
the social harmony of the state.=20

The BJP's changed stand on contesting the local self governing bodies elect=
ion also figured at the meeting which passed a resolution calling for an al=
liance with the Shiv Sena during the zilla parishad and civic elections, de=
viating from its earlier stand of shatpratishat bha ja pa (100 per cent BJP=
), Atul said. Around 300 party workers, including BJP leaders, Gopinath Mun=
de, union ministers Ram Naik, Pramod Mahajan and Jaywantiben Mehta were amo=
ng those who attended the meeting, presided over by the state BJP president=
, Pandurang Phundkar. The meeting will conclude on Sunday, Atul added. (PTI=
)=20
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THE ECONOMIC TIMES, Monday, July 09, 2001
Privatise MSEB generation, distribution: Panel
=20
EVEN as Maharashtra grapples over its energy crisis with US energy major En=
ron, Godbole Review Committee has recommended outright privatisation of the=
 loss-making state electricity board's distribution network and generation =
unit in the second part of its report to be submitted on July 11. "The repo=
rt outlines path breaking reforms, which not only suggests restructuring of=
 MSEB, but also makes its clear that its once-a-very-good board will be des=
troyed, if it continues as a government body", official sources said here o=
n Sunday. The report would be submitted to the state chief minister Vilasra=
o Deshmukh on Tuesday morning, sources said. "The committee has recommended=
 that MSEB's government ownership should be dissolved, however, the control=
 of transmission network should rest with it". "MSEB's current assets are c=
lose to worth Rs 12,000 crore and once Cabinet approves the proposal follow=
ing submission of the report, process like inviting tenders from private pa=
rties may be taken up", officials said.=20

According to the report, the interested companies would have to infuse capi=
tal investment in the distribution and generation networks with an increase=
d rate of return at about 4.8 per cent, sources explained. The 200-plus pag=
es report draws a detailed road map for the need to privatise MSEB, a diffe=
rent model from what was implemented in other states, sources added. The so=
urces said experiences of Orissa, Haryana, Karnataka and Andhra Pradesh wer=
e closely studied by the panel and then it decided to recommend this model =
of privatisation. "The mantra of privatisation of only distribution network=
 has failed all over the country", official sources said. The report has em=
phasised on creating distribution network zones in the state's urban and ru=
ral areas respectively, bids for which could be invited for, they said. "Th=
e rural zones are very crucial for us", sources said adding, "the report re=
commends that these should be handed over to any private party, be it a co-=
operative like the Pravara Electricity or a non-governmental organisation w=
ith a clear cut subsidy payout". The committee has also worked out a subsid=
y model, which would intersperse with a special "transmisssion charge" levi=
ed by the state government after privatisation to the companies, official s=
ources said. "The report suggests that the transmission company should levy=
 a surcharge over an above the billing chargs, which would be used for reco=
vering the cross-subsidies", the sources said. The aim to privatise only di=
stribution and generation is to facilitate pure trade of power and avoid an=
y kind of other interferences, mainly political, the sources added. (PTI)=
=20
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MID DAY, Monday, July 09, 2001,=20
Dabhol employees sure company will pull out, Deepak Lokhande

When Enron Chief Executive Officer Kenneth Lay arrives in India today to tr=
y to renegotiate the Dabhol power project, he will find that his employees =
are certain the company will pull out of the venture. " Everyday the govern=
ment adopts a new stance. We have been given an indication that the company=
 will pull out," said a senior officer working with Dabhol Power Company (D=
PC), Enron' s Indian subsidiary. " When the company was ready to renegotiat=
e, the state government was adamant that it wouldn't hold any discussions. =
Now, when they are pressing for renegotiations and a reduction in tariff, t=
he company is not willing. Lay will meet Prime Minister Atal Behari Vajpaye=
e and apprise him of the state government' s changing stands," he said. The=
 atmosphere at the Veldoor plant near Dabhol is one of gloom. Recently, sev=
eral thousand workers were laid off when the plant was forced to shut down =
because the Maharashtra State Electricity Board (MSEB) refused to purchase =
electricity. MSEB claimed that DPC did not fulfil conditions of the Power P=
urchase Agreement (PPA). " There used to be 10,000 labourers working at the=
 plant, either on the construction of the second phase, which is 90 per cen=
t complete, or for the first phase generating electricity. Today, the plant=
 looks like a smashaan (cemetery). Workers keep asking each other who is th=
e next to go. It is sad," he said.Till recently, the main gate of the plant=
 would be thronged by daily wage workers. Today, there are hardly any. Even=
 those having permanent jobs with DPC are not sure if their jobs are safe. =
Stories of how even senior officers were shown the door in an unceremonious=
 manner are making the rounds. " The other day a very senior officer was to=
ld that he was not required any more. By the time he reached his residence =
provided by the company, his phone lines were cut. He had to go out and pho=
ne relatives and friends. He was asked to collect his dues the next day. On=
 arriving at the gate, he was in for another shock. He was asked to get him=
self a visitor' s pass with restricted access. It was shocking," said a con=
tractor.
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MID DAY, Sunday, July 08, 2001
Villages suffer with Enron shutting shop

Enron is going back, and going back with it are the riches it brought to Gu=
hagar and Dabhol talukas. Most hit are traders at Shringartali (Tali), a ma=
rket that is 10 km away from Veldoor, where Enron built its 2000 plus mw th=
ermal power plant. The crash here has been more severe than the dotcom cras=
h as business volumes have reduced by more than 1000 per cent and the real-=
estate market has hit rock bottom.Says Uday Deolekar, who owns a building m=
aterial shop at Tali, "It used to be Diwali time while the project was on. =
On Sundays, the four-lane road would throb with buyers." The party was over=
, however, with the state Government pulling the plug on Enron. Gloom took =
over as workers started leaving the project site around February. There has=
 been little business activity since then.Deolekar used to run a small shop=
 of pan-beedi and groceries till about eight years ago when Enron came to D=
abhol. Construction activity picked up in the area and Deolekar, with his b=
rother-in-law Mohan Sansare, seized the opportunity and started supplying b=
uilding material. Business flourished and the Sansares took over a plot of =
land to open four more shops. Sitting at one of them, Deolekar is waiting f=
or customers today."Villagers in Tali and nearby areas wanted to refurbish =
their houses to accommodate paying guests coming in hordes. There was great=
 demand for accommodation and hardly any supply. While blue-collar workers =
were happy with dormitory-type arrangements, white-collar officials wanted =
one-room, kitchen, attached bath type apartments. Many villagers started co=
nstructing lodges and boarding houses to cater to demand. Little did they r=
ealise that the party would have come to an end in any case once the constr=
uction was over," says Deolekar.

However, his brother-in-law Mohan is happy that Enron is going back. "They =
were quite arrogant. They may have brought money to this area, but they als=
o brought all the vices - booze, gambling and what not. Enron will go back,=
 cash flow will dry up but these vices will now remain with us forever," he=
 says. He wants an Indian company to take over the plant and run it. Naseem=
shet, owner of Kasam Mohammed Memon shop, is one of the biggest traders in =
Tali. "I used to work for the Bharatiya Janata Party (BJP). When Enron offi=
cers came here in 1994, they stayed in my guesthouses. I was pressurised by=
 the party then to break off my ties with them, but I told myself I must ke=
ep politics out of business. I am happy I did that. See how BJP leaders are=
 now backing the project to the hilt. I received bulk orders and business s=
hot up. Last three years were crazy. Now we are back to square one - cateri=
ng to around 6,000 buyers from nearby villages," he says.

The Memons rented out an entire building, accommodating around nine persons=
 for Rs 21,000 a month during boom time. Now the building does not have any=
 takers even for Rs 3,000 per month. The Memons had also started a transpor=
t business seeing the vast money involved. Dabhol Power Company (DPC) used =
to pay Rs 45,000 per month to hire a Tata Sumo. "Our drivers started their =
own business. After the crash, they have come back to us begging for Rs 2,5=
00-a-month job. But now I can't afford them," he says. Nandu Bartakke, who =
owns a grocery shop in Guhagar, recalls how Rs 10 per kg rice would be term=
ed as "expensive" by locals. "After they got jobs at DPC, however, their li=
festyles changed. They wanted Surti Kolam rice, which costs Rs 24 per kg. I=
f I said it was costly, they would tell me they couldn't digest the Rs 10 p=
er kg rice. They forgot that they grew on that rice," he says. Most of thes=
e locals, who had suddenly become rich with their Rs 10,000-a-month jobs wi=
th DPC, are yet to get over the crash. Bartakke claims traders from Chiplun=
 market, which is 35 km away from DPC site, reaped rich dividends. "They kn=
ew what an industry requires. They have been catering to MIDC's industrial =
estate at Lote Parshuram for years now. They carefully invested their money=
 and focussed on what DPC needed. Hardly any of them ever indulged in tempo=
rary markets such as real estate or transport," he says.Agrees Shailesh War=
watkar, a shop-owner in Chiplun market. "We concentrated on chillar items s=
uch as plastic bags, ball pens and stuff like that. It was astonishing to s=
ee DPC paying Rs 5.25 for used gunny bag, otherwise priced at 60 paise in t=
he market. DPC always wanted huge quantities in real quick time, and they p=
aid any price that was quoted."=20

Not all have made money though. For Hari Babu of S N Instrumentation, the e=
xperience has come as a shocker. His company was awarded a sub-contract by =
Punj-Lloyd. Babu came in February and by April, DPC was sailing in troubled=
 waters. Since mid-June Babu has hardly had any work. He has sent back 78 p=
eople from his team and is awaiting further instructions from his company's=
 office in Kolkata. "We will sue them. How can they a terminate six months'=
 contract just like that?" says a livid Babu. But he knows the futility of =
his anger. "We will sue Punj-Lloyd. Punj-Lloyd will slap case against Sansc=
ra, the French company. Sanscra will start legal proceedings against Bechte=
l. Bechtel will file suit against DPC and DPC will go in arbitration agains=
t Maharashtra Government. It's a long and never-ending chain."=20

DPC auctioning jeeps, computers at throwaway prices=20

Dabhol Power Company (DPC) and several other companies who were involved in=
 the setting up of Dabhol Power Project, have started auctioning four-wheel=
ers, computers and are likely to put on sale refrigerators and air-conditio=
ners.The buzz in the area is vehicles like Tata Sumos, Mahindra Armada, Com=
mander and Jeeps are available at throwaway prices. "They are selling vehic=
les kilo ke hisaab se. I heard a jeep was available for just Rs 27,000," sa=
id Warwatkar. Indeed, there were a few vehicles put on sale at the site car=
rying a price tag of Rs 29,000 for 1997 Commanders. But the tag also mentio=
ned of major breakdown of engine as known defects. Most other vehicles were=
 available at a minimum bid price of Rs 60,000 onwards and looked in bad sh=
ape after a rough use in difficult terrain. Bodywork was required in most c=
ases. Locals, however, believe it's still a good buy.

The goods are, however, are offered to employees first, who bid their price=
. Some of them have started selling these goods at higher prices to others.=
 Naseem Memon bought a Mahindra Marshall for Rs 1.11 lakh through one of th=
e employees who had bought it at company auction, and immediately got an of=
fer of Rs 1.25 lakh. Memon is not selling it just now. "I will repair it an=
d I am sure it will fetch at least Rs 1.75 lakh to Rs 2 lakh.," he says. Th=
e area is flooded with buyers from Mumbai, Karad, Satara and Pune. Shortly,=
 computers, fridges and ACs will also be put on sale and DPC employees will=
 have their hands full with requests from outsiders.