Sebi swings into action to curb volatility
Sensex closes at record high
SmithKline snaps up Jagatjit’s Viva, Maltova
Sugar import duty hiked to 60%
Middle-class may be denied PDS kerosene
Power ministry weighs umbrella legislation
Mumbai set to taste Hutchison Orange
Foreign Exchange, Bullion, Stock Indices

 
 
SEBI SWINGS INTO ACTION TO CURB VOLATILITY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 8 
The Securities and Exchange Board of India (Sebi) today decided to bring 156 more scrips under rolling settlement in two phases ending March 21 and May 8, and expanded the list of shares that must be traded in dematerialised (demat) form as part of a larger effort to check volatility and clamp down on speculation in stock markets.

The rolling settlement list includes the scrips of 74 companies which changed their names to have an infotech tag, 31 NBFCs whose applications for registration were rejected by RBI, 35 highly liquid B1 group scrips under compulsory demat and 15-18 firms which have witnessed sharp fluctuations. Companies which have changed names to include infotech will be included in the compulsory rolling settlement from May 8. The lists was released by Sebi executive director Pratip Kar after a meeting of the Sebi committees on dematerialisation and rolling settlement. “The decision on rolling settlements and demat will ensure that the markets are modernised by adopting the best international practices,” Sebi chairman D R Mehta said.

He swatted criticism that the moves will squeeze liquidity and turnover. “The prices of a few shares will fall, which is a temporary phenomenon. If the scrips are fundamentally strong, it will be discounted in the market and they will recover.”

The list of shares which must be settled in demat form by institutional investors has been enlarged from 418 to 750. On the other hand, general investors will now have to settle 550 shares in the paperless form, up from 199 at present. This will done in three phases. Kar said the 350 scrips to be included in the demat list for general investors will be effective from March 21, May 8 and June 2. He made it clear that the new list of scrips does not include those from the A group as the regulator is yet to take a final view on the J R Varma committee report on permitting Badla under the rolling settlement.

The B1 group scrips, which are already on the demat list, will be traded in their new form from March. The remaining scrips would be brought under ‘T+5’ mode of settlement by May 8.

Kar warned that trading will be stopped in the scrips of companies which have not signed agreements with depositories. He also said it was unfortunate that firms have delayed dematerialising shares sent by investors. He said Sebi will publish the names of errant companies from next month.

The main objective of introducing rolling settlements, Kar said, is to bring the Indian securities market on par with those in the developed countries where the systemic risks are low and infrastructure facilities keep pace with changes in technology.

In a significant decision, Sebi said it has set up a committee up to study the fee structure of depository participants (DPs). The move follows several complaints received by the market watchdog about the DPs charging exorbitant fees for opening accounts and servicing investors.    


 
 
SENSEX CLOSES AT RECORD HIGH 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 8 
The Bombay Stock Exchange (BSE) sensitive index closed at an all-time high of 5610, gaining 136.56 points with foreign institutional investors (FIIs) and domestic operators lapping up infotech, telecom and cement stocks in frenzied buying.

Volumes on the BSE also reached an all-time high at Rs 5521.95 crore, surpassing the previous high of Rs 5293.19 crore which was touched only yesterday.

The 30-scrip sensex opened on a strong note at 5585.38, moved further upwards to close at 5610.56 — it was 5474 yesterday — a gain of 2.49 per cent. The BSE-100 index shot up by 25.51 points to 3206.56 from the previous close of 3181.05.

Today’s upswing was a direct reaction to Monday’s trend on the Nasdaq in the US where there was extremely bullish trading in infotech stocks. The Nasdaq had gained 1.80 per cent on Monday to close at 4320.63.

Foreign institutional investors (FIIs) bought heavily in software scrips and in MTNL, ITC, HPCL and L&T; local institutions picked up shares of Reliance, HLL, ACC and BSES.

Infosys touched an all-time high of Rs 9115 on the BSE before closing at Rs 8880, a gain of Rs 408.50.

However, some software scrips suffered a setback with speculators booking profits on fears that such scrips will be included in the rolling settlement. Software scrips to suffer a setback on this count include Aftek Info, Cybermate, LCC Info and Mindteck.

In the specified group, 12 scrips including seven index-based ones were locked in the upper circuit filter.

Zee Telefilms was the most active scrip with a turnover of Rs 703.87 crore followed by Satyam Computer (Rs 579.44 crore), Pentamedia (Rs 443.26 crore), HFCL (Rs 345.70 crore) and Global Tele (Rs 272.39 crore).    


 
 
SMITHKLINE SNAPS UP JAGATJIT’S VIVA, MALTOVA 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb 8 
Nutrition giant SmithKline Beecham Consumer Healthcare (SBCH) has acquired Viva and Maltova brands from Jagatjit Industries (JIL) for Rs 86.25 crore.

SmithKline has also agreed to enter into a contract arrangement with Jagatjit for the manufacture of the two brands. The companies already have a similar arrangement to produce Boost at Jagatjit Nagar in Hamira. The transfer of brands would be effective from January 1 this year, a company release said here.

“Both Viva and Maltova complement our existing product portfolio. This will help us consolidate our presence in the health food drink segment and offer greater choice to our customers,” SBCH managing director Simon Scarff said. The company already has Horlicks and Boost in its portfolio.

“JIL plans to pursue its core business. We are regarded as an alcoholic beverage company and will continue to consolidate and focus on this lucrative sector. Our divestment is strategic,” Vijay Kapoor, deputy managing director of JIL, said.

Viva and Maltova have a combined share of over eight per cent in the country’s health drinks market. Viva is popular in Andhra Pradesh while Maltova has a strong presence in other southern states, and the north. They are also exported to Sri Lanka, Bangladesh, Myanmar and West Asia, something that will help SBCH enhance its global reach.

“This fits in well with the strong penetration of Horlicks and Boost, which have become household brands in the south and the east,” SmithKline said.

The company said the greater volumes would give SmithKline greater sourcing flexibility both for malt extract and skimmed milk powder from Jagatjit, which are extensively used in the manufacture of its products. “Smithkline is planning a major marketing thrust for both brands,” Scarff said. He said both Jagatjit and SmithKline stood to gain immensely from the deal and would emerge stronger and better focussed in their respective areas of business.

Reacting to the acquisitions, share price of SmithKline rose to Rs 475.50 on BSE from yesterday’s close of Rs 442.85.    


 
 
SUGAR IMPORT DUTY HIKED TO 60% 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb 8 
The Union cabinet today hiked the import duty on sugar to 60 per cent from 40 per cent.

Announcing this, parliamentary affairs minister Pramod Mahajan told reporters that the Cabinet had taken this decision to dissuade imports because of a projected record 160 lakh tonnes of sugar production during the current season.

Sugar production in 1999-2000 is estimated at 160 lakh tonnes compared with 155 lakh tonnes in 1998-99.

Last December, the import duty on sugar was raised to 40 per cent though imported sugar at this rate was still cheaper than local ones.

In 1998-99 the country imported about 8.58 lakh tonnes of sugar worth Rs 1084.95 crore with 67 per cent of it coming from Pakistan. The government hopes that the new rates would help in restricting cheap imports from Pakistan, Mahajan said.

The Cabinet also decided to allow an additional one lakh tonne of onion export in the wake of good production in Maharashtra, Andhra Pradesh and Karnataka, Mahajan said.

The government had permitted exports of one lakh tonnes of onion in December to be carried out over a two-month period and fresh allocation would be in addition to the earlier permission and would be carried out by April.    


 
 
MIDDLE-CLASS MAY BE DENIED PDS KEROSENE 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, Feb 8 
The government is planning to stop the sale of kerosene to middle-class families and raise the prices of foodgrains supplied through the public distribution system (PDS) to check the runaway increase in subsidies. However, it wants to sweeten the bitter pill by offering the poor 15 kgs of grain, up from 10 kgs at present.

The move is among the series of budget-measures being planned by a cash-strapped government to slash the ever-rising subsidy bill. It estimates the current Rs 6,000-crore subsidy bill on kerosene will be reduced by at least a third while that on food will come down by 22 per cent from Rs 10,700 crore.

Under the plan, only lower middle-class and poor families described as ‘carbon poor’ — a group to be identified in consultation with states — will be entitled to cheap kerosene. Others will have to buy it from the open market at Rs 8.20-8.50 a litre.

A revenue department proposal, which will help weed out the non-target class, may be pushed through if the government decides to implement the plan.

Under it, all families who either pay income tax or have at least one of the six items — urban residential house or flat, car, credit card, foreign travel, club membership or telephone — will be kept out of the ambit of subsidised kerosene. A similar move has been suggested by the department in the case of foodgrains.

Senior finance ministry officials say they are optimistic the measures will be accepted by the ministries concerned, and states. Currently, the government shells out Rs 5.70 a litre in subsidising kerosene which is sold at an average price of Rs 2.60 through the PDS.

In all, 10-11 million tonnes of subsidised kerosene is sold through this route.

However, the move to reduce the food subsidy bill by raising prices is not expected to be as successful. The government subsidises foodgrain to middle class families — also described as above-the-poverty-line families — by about 17-24 per cent and those sold to poor families by a whopping 70 per cent.

In other words, while it costs the government Rs 11-12 to sell a kilo of rice in its nation-wide chain of ration shops, it is realises only 3.50-5.50 a kilo. Similarly, for wheat, it spends Rs 8.08 a kilo but gets just Rs 2.50-4.50.

Therefore, a modest 10-15 per cent increase will hardly make a major dent in the subsidy bill, considering the fact that the government will also raise the quota of food sold through the PDS.

The government had tried to hike the PDS wheat and rice prices in 1998 but it was rolled back on January 2 1999 by an election-bound Vajpayee government which felt the move would cost it votes.    


 
 
POWER MINISTRY WEIGHS UMBRELLA LEGISLATION 
 
 
FROM OUR CORRESPONDENT
 
New Delhi Feb 8 
The Union power ministry plans to bring in a draft Bill to enact a consolidated statute encompassing the Indian Electricity Act 1910 and Electricity Supply Act 1948 to make metering mandatory and also to remove the anomalies in these Acts.

Power minister P. Rangarajan Kumaramangalam stated today that the draft Bill will be brought out soon.

“National Council for Applied Economic Research (NCAER) will circulate the draft paper at the state power ministers’ conference to be held on February 26. The draft paper will highlight the need for a consolidated Act, which is essential for reforms in the power sector.”

A consolidated statute, which does away with the anomalies of the existing ones, is also important for the privatisation of state electricity boards (SEBs).

“The privatisation of the power sector will see new issues cropping up, which cannot be resolved by the existing Acts. Besides, the existing laws overlap each other, which needs to be sorted out,” said Kumaramangalam.

The consolidated Act would also enable state governments take strict action against those institutions which fail to install meters. Kumaramangalam asserted that each unit of power distributed and consumed has to be accounted for.

“Many posh colonies in India, particularly those in Delhi, do not have meters though they consume the maximum amounts of power. While the popular belief is that slums are responsible for the large thefts, in reality the slums and unauthorised colonies consume insignificant units of power,” Kumaramangalam said .    


 
 
MUMBAI SET TO TASTE HUTCHISON ORANGE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 8 
Hutchison Max Telecom Limited today announced the launch of the global communication brand ‘Orange’ from February 14.

Unveiling the Orange logo, Asim Ghosh, managing director and CEO of Hutchison Max Telecom Limited said: “We believe that Orange has a great future in India. Its launch in Mumbai will see many benefits to Mumbai’s mobile users who are on our network. India will be the eighth country where Orange will be launched.”

The new brand will offer a number of proprietary Orange innovations in cellular services that are available to around 4.9 million subscribers in other markets.

The Orange trademark, which belonged to German company Mannesmann till recently, may undergo a change following Vodafone AirTouch’s acquisition of the company at a record $ 176 billion.

Hutchison officials were, however, tightlipped about the ownership of the Orange trademark.

“We have an agreement with Orange, which will not be affected by any change in ownership of the brand,’’ the officials said.

Hutchison earlier had a stake in Orange which was sold to Mannesmann.

The agreement is an exclusive agreement which allows Hutchison to use it in other telecom circles of the country.

Hutchison Max Telecom is also introducing ‘Smart Messaging’, a service provided by Orange elsewhere, that will allow subscribers to get on-line news update through a tie-up with NDTV.

Ghosh said Orange envisages itself in the vanguard of a wirefree world. “People communicate with people, not places. People will not be tied to fixed wires and fixed telephone points,’’ Ghosh said of the Orange vision.

Ghosh said that though the subscriber base of Hutchison is constant at 1.33 lakh subscribers, volumes in airtime and revenues have almost doubled.

This was possible due to lowering of airtime charges and unique schemes floated by the company.

He said that over a period of time, Indian cellular subscribers can look forward to a number of other Orange value-added services, which would make communication world wire-free. Orange will open up a new market in the Indian telecom sector by extending a cellular service that is simple, affordable and accessible.

Orange will bring with it tremendous technology advantages which will change the way consumers in India would view the utility of their cellular phones.

Orange UK has over 5 million customers and 20 per cent market share of the UK mobile market.

An impressive performance in its five years of existence, especially as it had a growth of 45 per cent from the beginning of the year.

Orange also has a presence in Austria, Belgium, Switzerland and Israel. The company has over 5 lakh customers Austria and 3 lakh customers in Israel.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 
Foreign Exchange
US $1	Rs 43.61	HK $1	Rs. 5.55*
UK £1	Rs 69.86	SW Fr 1	Rs. 26.30*
Euro	Rs 43.07	Sing $1	Rs. 25.40*
Yen 100	Rs 40.02	Aus $1	Rs. 27.30*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta		Bombay
Gold Std (10gm)	Rs. 4725	Gold Std (10 gm)	Rs 4725
Gold 22 carat	Rs. 4460	Gold 22 carat	Rs 4370
Silver bar (Kg)	Rs. 8325	Silver (Kg)	Rs 8335
Silver portion	Rs. 8425	Silver portion	Rs 8340

Stock Indices

Sensex	5610.56	+136.56
BSE-100	3206.56	+25.51
S&P CNX Nifty	1662.75	+26.15
Calcutta	141.90	+1.88
Skindia GDR	NA	NA
   
 

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