Dunlop set to roll again from Feb 7
Reliance outbids ONGC in oil exploration
Lever rebound fuels sensex rally
L&T board to continue recast talks today
Polaris weighs stock split
Maruti prices up on sales tax push
Foreign Exchange, Bullion, Stock Indices

Calcutta, Jan 6 
The Dunolp India management today decided to reopen the Sahagunj and Ambattur units on February 7 after a gap of two years, but with a catch: it won’t settle the dues of the 7,500-odd workers of the two factories at present.

Ashok Pal, president of the Citu-backed Dunlop Workers’ Union, while saying his men were in favour of reopening the factory, added, “We cannot comment on the offer unless we get the minutes of today’s meeting.... We are in favour of reopening the factory provided the management pays our dues. But the management has categorically stated that the dues will not be cleared at the time of reopening. We will discuss the matter and convey the decision to the management.”

The company has decided to start maintenance work on the two units from February 7 and start production in another four weeks. The Dunlop management led by president M.D. Shukla met the unions of both Sahagunj and Ambattur factories today to discuss the reopening and resumption of operations. The bipartite discussion started at 11 am and ended at 4 pm.

Shukla told the employees the start-up expenses for both the factories will be Rs 20 crore. The promoter of the company M.R. Chhabria will provide the funds to reopen the units. The management has scaled down the initial funds required to reopen the units from Rs 26 crore to Rs 20 crore. In all the earlier revival schemes, the company had pegged the initial expenses at Rs 26 crore.

Shukla said a month’s time is needed to re-open the plants since the engineers will have to assess the technical feasibility as the equipment and machinery had been lying in a disused condition for the last two years.

Today’s meeting was attended by all the unions, including the Citu-affiliated Dunlop Workers’ Union. Representatives of the Dunlop Factory Employees Union of Ambattur were also present.

“Shukla said the bankers, financial institutions, suppliers, employees do not trust the company. Our immediate task will be to resume operations so that we can regain the confidence of these people,” Pal said.

The consortium of banks led by United Bank of India refused to lend financial support to the company, alleging that the promoters were siphoning off funds.

After today’s meeting, the bone of contention is the management’s tough stance that the employees should not raise any demand on the payment of arrears—wages and bonus—in the next one year after the factory reopens.

Shukla said since the company was not operational, it will not be possible for the management to address the issue now. However, after a year of operations, the company will definitely look into the issue positively, Shukla added.

The management has said the company will buy the raw materials in cash and will ask the customers to pay in cash.

Shukla said a management team will be set up with one representative from the union. The team will meet every month to discuss the performance of the company. “Shukla described this as a monitoring meeting and said necessary steps will be taken to boost the company’s bottomline following these meetings,” Pal added.

Ranajit Neogy of the Intuc-affiliated Dunlop Rubber Factory Labour Union said, “We are happy with the development. The Board for Industrial and Financial Reconstruction will take time to give a final judgment. In the meantime, the workers will be able to earn something.”

The BIFR hearing is scheduled for January 18. The company was referred to BIFR in March 1998 and was declared sick in June that year.    

New Delhi, Jan 6 
The Cabinet committee on economic affairs (CCEA) today awarded 12 blocks for oil exploration to Reliance in a two-horse race that catapulted one of India’s most successful industrial conglomerates to a position where it could rival ONGC’s colossus-like presence in the oil-hunt business.

The decision, which came along with another significant move to raise the foreign direct investment (FDI) cap in bulk drugs from 51 per cent to 74 per cent, gave the public sector upstream major only five blocks of the 27 offered under the New Exploration Licensing Policy (NELP) in the second half of 1999.

The Cabinet cleared amendments to the Drug Policy of 1986 required to hike the FDI limit in bulk drugs, intermediaries and formulations. The Rs 179.65-crore palm oil development programme, the Rs 50-crore ‘Assistance to Co-operatives’ scheme and guidelines for sanctioning rehabilitation packages for milk federations were among the other plans that won executive approval.

In a contest that almost looked one-sided, ONGC lost out to Reliance even in blocks where it was pitted directly against ONGC. This makes it the maiden venture of Ambanis, who already own refineries and produce oil, in the exploration business.

Reliance, which bid for 14 blocks, surprised the oil industry with its resounding entry into the upstream sector. Other winners in the round include Gail-Gazprom, Cairn Energy, Mosbacher Energy-Energy Equity-Hindustan Oil Company Ltd, ONGC-Gail and ONGC-Oil India.

An official spokesperson said the government had received 45 bids for the 27 oil exploratory blocks. Of the 25 awarded, two are on-land blocks, seven deep-water offshore blocks and 16 shallow-water offshore blocks. The contracts for the 25 blocks are expected to be signed by the end of March.

In a significant move, the rate of royalty on crude has been hiked from Rs 578 to Rs 750 metric per tonne.

The new rates will come into retrospective effect, from April 1996, and would benefit the major oil producing states of Gujarat and Assam.

In the pharmaceuticals sector, the 74 per cent foreign investment will be considered on a case to case basis, particularly in the manufacture of bulk drugs produced by using the recombinant DNA technology, apart from specific cell/tissue targeted formulations

The move to increase the FDI limit is expected to help attract foreign players in the drugs and pharmaceuticals industry.    

Mumbai, Jan 6 
Hindustan Lever (HLL) reclaimed the top slot on the market’s list of chartbuster scrips in terms of weightage and value on a day when cyclical shares helped the Bombay Stock Exchange (BSE) sensex post a modest gain of 64.53 points when it closed at 5421.53 points compared with its previous finish of 5357.

After Wednesday’s roller-coaster that left key shares battered and investors wondering whether the new-year stock surge was only a blip on the screen, old favourites ITC joined Lever as the most sought-after scrips even as infotech powerhouses were mauled. Infosys Technologies, for instance, plunged to Rs 14312.85 from its previous close of Rs 15,557.40.

HLL reaffirmed its numero uno status — despite Doubting Thomases who sniggered it wouldn’t stay up there for long — in terms of weightage in the sensex after its representation increased to 16.6 percent. The weightage of Infosys, which wrested the top spot only on Tuesday, slipped from 18.29 to 15.55 percent.

Lever also unseated Infosys to win back its status as the scrip with the second-highest market capitalisation. After today’s trading, Lever’s market cap was pegged at Rs 50,600 crore, Infosys at Rs 47,385 crore. The price of the Infosys share slipped from a high of Rs 16,932 earlier this week to Rs 14,312.85 today. However, Wipro continues to be the top share with an unassailable Rs 66,900 crore in market capitalisation.

In specified group, 25 scrips including ITC, MTNL, Hindalco and Grasim were locked in the upper-end circuit filters after exhausting their daily limits even as NIIT and Infosys hit their lower price bands.

The rally in cyclicals followed heavy purchases by FIIs and institutions who focused on medium-priced stocks like Reliance, Tisco and ITC to dodge fresh margins; they sold software shares to book profits.

Market leader Satyam Computers rose by Rs 43 to Rs 2483, Reliance shot up by Rs 7.45 to Rs 292.95, Grasim by Rs 34.35 to Rs 464.35, Lever by Rs 114.50 to 2304.50, Grasim by Rs 34.35 to Rs 464.35 and ITC by Rs 58.35 to Rs 788.35. Losers included Zee Telefilms, Pentafour, Infosys and NIIT.

Special margins on four more

The BSE today expanded the list of stocks which will attract special margins from 225 to 229. These are imposed are in addition to daily and the additional volatility margins already in vogue. An exchange release said 363 scrips currently attract additional volatility margins for the settlement commenced from January 3. Circuit filters have been reduced from their normal levels in the case of three shares.    

Mumbai, Jan 6 
The board of Larsen & Toubro Ltd (L&T) will meet again tomorrow to discuss the report prepared by management consultant Boston Consulting Group (BCG) to restructure the company.

The board today failed to arrive at a consensus over the recommendations made by BCG.

“The meeting remained inconclusive. The board will meet again tomorrow to discuss the issue,’’ L&T officials said.

The officials remained non-commital on whether a final decision on restructuring will be taken tomorrow, though industry circles expect L&T to make some announcement after the meeting.

There has been intense speculation in industry circles of L&T planning to hive off its cement operations into a separate subsidiary with the majority stake going to a foreign company. Reports of the company hiving off its information technology division into a separate company and list it on the Nasdaq are also doing the rounds.

After it implements the BCG recommendations, L&T is expected to operate mainly in engineering, procurement and construction, with interests in electricals and electronics, earth moving equipment and tractors.

It is also believed that some joint ventures of the company will be sold off.

A spokesperson for the company refused to comment on the reports. He said the company would make the BCG recommendations public in a week, and the action it intends to take on them.

At present, L&T has four major lines of business: engineering and construction (which contributes 54 per cent to its sales); cement (23 per cent); electrical and electronics (11 per cent) and earth moving equipment (5 per cent).    

Mumbai, Jan 6 
The board of Polaris Software Lab is meeting on January 11 to consider a stock split.

The board will also discuss a proposal to set up a subsidiary in Germany and announce a employee stock options plan. It will also take on record the company’s performance in the third quarter of the current fiscal.

The stock markets reacted to the announcement of the stock split by sending the scrip spiralling to an intra-day high of Rs 2050.45.

The scrip then touched a low of Rs 1746.75 before closing at Rs 1960.60, a gain of Rs 62. It had opened lower at Rs 1850 from the previous day’s close of 1898.60.

The company had entered the capital market for the first time with a Rs 73.76-crore public issue of 35,12,500 equity shares of Rs 10 each at a premium of Rs 200 per share. The issue opened for subscription in August last year and met with good response.

The company specialises in software services and product development. The prospectus of its initial public offer (IPO) says its revenues and post tax profits have grown at a compound annual rate of 99 per cent and 105 per cent respectively.

For the year ended March 31, 1999, the company registered a total income of Rs 60.54 crore and a profit after tax of Rs 14.65 crore.

The equity issue was made to partially fund the setting up of three off-shore development centres at a cost of Rs 58.27 crore.

The company also has plans to set up global development centres at New Jersey and London at an investment of Rs 8.19 crore.

The cost of expansion was met by the IPO of Rs 73.76 crore and internal accruals of Rs 3.70 crore.    

New Delhi, Jan 6 
Close on the heels of the Baleno and WagonR launches, Maruti Udyog Ltd today upgraded the engines of M800, Gypsy and Esteem models. It also revised the prices of all its models countrywide to align them with the newly-introduced 12 per cent uniform sales tax rate.

The M800 EX and M800 DX have been fitted with multi-point fuel injection systems (MPFI) and four valves per cylinder as against the existing two valves per cylinder.

The Esteem LX will have additional features like central locking system, power window (front) and chrome grill.

Announcing the new variants of its its models, Maruti managing director Jagdish Khattar said, “We have invested about Rs 600 crore to upgrade the models. From tomorrow, the new models will be available all over the country. The prices of all the models despatched from tomorrow will be revised because of the imposition of a uniform 12 per cent sales tax by state governments.”

The M800 EX, which will meet the Euro-II emisson norms with MPFI, will have a new, more powerful, engine. It will cost Rs 2.47 lakh (ex-showroom) as against the existing Rs 2.17 lakh (ex-showroom Calcutta). The M800 DX with a Euro-II-compliant MPFI-fitted new engine will cost Rs 2.71 lakh as against Rs 2.42 lakh (ex-showroom Calcutta).

The M800 which meets Euro-I norms with MPFI will be available for Rs 2.16 lakh. The company will retain the M800 standard with carburettor technology, which will be available for Rs 2 lakh.

“We will examine what needs to be done when the Supreme Court gives its order (on emission norms),” Khattar said.

The new engine in M800 EX and DX versions will increase the power output to 44 bhp at 6,000 rpm as against the existing 39.5 bhp at 5,500 rpm.

This is expected to give enhanced pulling power and better cooling conditions. The maximum torque output will go up to 62 newton meter at 3,000 rpm as against the existing 56 NM at 2,500 rpm.

More torque will mean more climbing power and better response in start-stop driving conditions.

Besides, the variants of M800 will have five-speed manual transmission systems as against the existing four. This will lead to better fuel efficiency.

Maruti has also increased the power of Gypsy King. It will now have a G13 bmp 16-valve engine.    

Foreign Exchange
US $1	Rs 43.51	HK $1	Rs. 5.50*
UK £1	Rs 71.65	SW Fr 1	Rs. 27.65*
Euro	Rs 45.11	Sing $1	Rs. 25.95*
Yen 100	Rs 41.52	Aus $1	Rs. 28.25*
*SBI TC buying rates; others are forex market closing rates


Calcutta		Bombay
Gold Std (10gm)	Rs. 4495	Gold Std (10 gm)	Rs 4460
Gold 22 carat	Rs. 4175	Gold 22 carat	Rs 4100
Silver bar (Kg)	Rs. 7950	Silver (Kg)	Rs 8120
Silver portion	Rs. 8050	Silver portion	Rs 8125

Stock Indices

Sensex	5421.52	+64.53
BSE-100	2835.83	+2.83
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