Sensex surges 167 points as lending fears recede
Ministers shun Suzuki, no talks on selloff
Software firms ready to pay taxes, says Nilekani
Haldia set to get two mobile phone operators
Banking on businesswomen
Philips net leaps 134%
Telco to spin off three non-core divisions
Ford revs up for 1.3 litre Ikon
Gramophone gets ready for acquisition drive
Insurance watchdog to be set up by March 15

 
 
SENSEX SURGES 167 POINTS AS LENDING FEARS RECEDE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 24 
The Bombay Stock Exchange (BSE) sensitive index today notched up a 167.71-point gain, clawing back after Wednesday’s clobbering in a surge fuelled by heavy purchases in Hindustan Lever and Infosys Technologies.

The confusion that prevailed yesterday over the denial of loans to brokers was cleared when Bank of India restored the credit-lines of most BSE brokers last night. The highlight of the day, however, was a courtesy call made by BSE president Anand Rathi and vice-president Deena Mehta to the Reserve Bank.

Speculation swirled that the meeting discussed the tightening of norms for broker loans but the two said later that not much should be read into a meeting planned a fortnight back, and that it was nothing more than a courtesy call.

However, there was a booster for the markets when the RBI clarified that banks were not ‘over-extended’ in their loans to initial public offers (IPO). This statement dispelled fears of tight controls on bank advances to the broking fraternity.

Opening sharply higher at 5764.16, the sensitive index hit an intra-day high of 5816.16 before closing a shade lower at 5810.17 as against Wednesday’s close of 5642.46.

The BSE-100 index edged up by 4.90 points to 3588.17 from its previous close of 3583.27.

The market regained its poise, in large part, due to good purchases by foreign institutional investors (FIIs) as they kept up their tempo since the start of the month.

Local institutions and operators also jumped onto the buy bandwagon. Local institutions, including the Unit Trust of India, reportedly made heavy purchases in Zee Telefilms and Digital Equipment.

However, dealers were concerned over the high badla rates (75 to 80 per cent) on the Calcutta Stock Exchange, something they felt could weaken the market sentiment on Friday.

In the A group, 14 scrips, including index heavyweights like Lever, were locked in the upper-end circuit filters at the close. However, Wipro and IndoGulf Corp suffered sharp losses and hit their low-end price bands.

Satyam Computers remained the most active scrip with a turnover of Rs 676.27 crore on a total volume of Rs 4054.75 crore. It flared up by Rs 326.90 to Rs 5240. Zee Telefilms surged by Rs 115.15 to Rs 1555.05, HFL by Rs 113.65 to Rs 1534.70, Global Telesystems by Rs 165.15 to Rs 2230.15 and Lever by Rs 229.55 to Rs 3099.55.

LSE inks pacts

The London Stock Exchange today signed a memorandum of co-operation with the Bombay and National stock exchanges to encourage more Indian companies to list on the London bourse.

The agreement, which supports cross-listing of companies and allows for sharing of developing information including staff training, strengthens the relationship between the exchanges by providing a framework for future collaboration between them.

The agreement was signed by BSE president Anand Rathi, NSE managing director R.H. Patil, and LSE deputy chairman Ian Salter in Mumbai, an LSE press release said.    


 
 
MINISTERS SHUN SUZUKI, NO TALKS ON SELLOFF 
 
 
FROM M.RAJENDRAN
 
New Delhi, Feb 24 
The president and CEO of Suzuki Motor Corporation, Osamu Suzuki, may have to make another trip to India soon to meet heavy industries minister Manohar Joshi for a discussion on the issue of buying out the government’s 50 per cent stake in Maruti Udyog Limited (MUL).

Maruti sources said Suzuki has not been given an appointment by the minister for heavy industry. Nor is he sure of an audience with the minister for disinvestment, Arun Jaitley, and industry minister Murasoli Maran.

There was confusion this evening when the office of T. S. Vijayraghavan, secretary in the ministry of heavy industry, said it had not given Suzuki an appointment and Maruti Udyog refused to comment on his schedule.

However, a Maruti official accompanying Suzuki said the appointment with the secretary has been finalised for Saturday. “We are also trying to get an appointment with the minister of heavy industry and will soon meet him,” he said.

Later, a senior official in the ministry of heavy industry, said Joshi could not meet Suzuki at a time when the Parliament was in session because that could court controversy.

“We have received a request from Suzuki but the minister will not be able to meet him to discuss a major issue like the divestment of the government’s stake in Maruti when Parliament is in session. We do not wish to be embroiled in a controversy. In any case, the proposal to divest the government’s stake has not been finalised. It will need Cabinet approval,” he said.

Suzuki’s desire to make another trip in quick succession is seen here as a sign that the Japanese partner is eager to raise its stake in Maruti. From the government’s side, the agenda has already been set by Joshi, who has already asked Suzuki to speed up the transfer of gearbox technology to the joint venture.

However, executives in the team led by Suzuki today said the debate over the gearbox technology was a non-issue.

Addressing dealers earlier in the day, Suzuki said Maruti Udyog will introduce at least one new passenger car model every year to maintain its leadership in the Indian automobile industry.    


 
 
SOFTWARE FIRMS READY TO PAY TAXES, SAYS NILEKANI 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 24 
Nandan Nilekani, managing director and chief operating officer of Infosys Technologies, today said the software industry has matured enough to be taxed.

“I feel that the domestic software industry has reached a critical mass. Therefore the time has come for the industry being put in the same league as everybody else,” Nilekani said.

Nilekani was speaking to reporters after launching the electronic bill presentment and payment (EBPP) service of ICICI Bank for which Infosys has provided the necessary software.

ICICI Bank managing director and CEO H.N. Sinor said the upgrade was made as the bank received a good response for its bill payment facility launched in August.

The EBPP service would first be available on the Internet and later on automated teller machines (ATMs).

The EBPP will allow customers to manage their bills from utility companies, mobile phone service providers and credit card companies.

This facility will be available to customers in Mumbai, Delhi, Calcutta and Hyderabad. It would be extended to cover other cities of the country.

ICICI Bank officials said the EBPP would provide a schedule of the payments made along with records of the customer’s bank account.

ICICI has already joined hands with MTNL, BPL Mobile, Tata Teleservices and Command Cell and is in talks with the railways and airlines to provide this facility.    


 
 
HALDIA SET TO GET TWO MOBILE PHONE OPERATORS 
 
 
BY RENU M R KAKKAR
 
Calcutta, Feb 24 
Haldia, which until now was seen as a poor market for cellular services, is all set to get two cellular service providers.

Reliance Telecom, the cellular licence holder for the West Bengal circle which has ignored Haldia until now, is planning to launch its cellular services in the next few months. The department of telecom services—which was spun off recently from the department of telecom—is also headed for Haldia.

“Haldia is the second most important town in the state after Calcutta and the minister of telecommunications Tapan Sikdar has taken a special interest in ensuring that a cellular service is available there in the first phase of DTS’ operations along with Calcutta,” said top officials in the West Bengal telecom circle.

Sources in the industry ministry, however, indicated that Lakshman Seth, the chairman of Haldia Development Authority, had done a fair amount of lobbying to persuade DTS to come to Haldia.

The cognoscenti has been intrigued by Reliance Telecom’ decision to establish its cellular networks in Siliguri and Durgapur and not in Haldia.

Haldia is widely regarded as an attractive destination as it houses the icon of Bengal’s industrial resurgence — the Rs 5,170 crore Haldia Petrochemicals — and other top projects funded by overseas investors which gives it a huge growth potential.

Reliance Telecom officials in Calcutta, however, denied that there was any delay. “We plan to start operations in other centres. Haldia will be in the next phase of expansion. The time span we are looking at is by April,” officials said. That seems to coincide with the plans announced by DTS which will be providing the Indian Mobile Personal Communication Services using the GSM technology.    


 
 
BANKING ON BUSINESSWOMEN 
 
 
FROM CHAITALI CHAKRAVARTY
 
New Delhi, Feb 24 
Housewives need not haggle with their husbands for that extra dough to follow their entrepreneurial instincts. All that the budding entrepreneurs have to do now is form a co-operative and approach the Mahila Bank — a bank being set up by the Ficci Ladies Organisation (FLO), modelled on the Gramin Bank of Bangladesh.

“We have received in-principle approval from the finance ministry. FLO will talk to the State Bank of India (SBI), Canara Bank and Sidbi for the initial corpus and is planning to get part of the fund as grant and part as loan. Our aim is to cultivate entrepreneurial skills among rural and marginalised women. The Mahila Bank will be on the lines of the Gramin Bank of Bangladesh, which means no collateral will be required while giving a loan. Women only need to approach the bank as a co-operative, as loans will not be given to any single individual,” Renuka Shah, the new Calcutta-based president of FLO said.

The Gramin Bank, which was started in Bangladesh in 1983 for rural women, was immensely successful and Shah has similar hopes for the Mahila bank.

“It will work very well in India as there will be no impediments usually associated with loans such as a guarantor and proof of income. If any member of the co-operative defaults in payment, then other members will have to pitch in the money on her behalf,” she said.

Shah said loan recovery in this regard is usually 98 per cent as mutual liability and group pressure forces one to pay up on time. The bank will function as any other, she said, adding, “may be the interest rate will be half a per cent lower.”

Shah said there would be a ceiling on loans though the amount is yet to be decided. She said the loan amount would be small but sufficient enough to get the entrepreneurs going.

Shah sees huge potential for the bank in Calcutta and its peripheral areas.

“The bank, which will be headquartered in Delhi, will be in place within the next two months. Calcutta is next on our agenda. We hope to extend the bank’s facilities to Calcutta because women in the suburban areas there need it the most. The per capita income as well as women’s participation in economic growth and development is very low,” she added.    


 
 
PHILIPS NET LEAPS 134% 
 
 
BY A STAFF REPORTER
 
Calcutta, Feb 24 
Philips India Ltd (PIL) has registered a 4 per cent growth in its turnover at Rs 1745 crore for the 12 months ended December 31, 1999, compared with Rs 1675 crore in the previous year. The company has also posted a whopping 134 per cent rise in post tax profit to Rs 28.1 crore compared with Rs 12 crore in 1998. Pre-tax profit grew by 56 per cent to Rs 31 crore from Rs 20 crore. The company’s board of directors, which held a meeting today to approve the financial results, has recommended a 25 per cent dividend.

Last year’s income, however, went up largely because of extraordinary income of Rs 20 crore which earned a profit of Rs 11.4 crore from the sale of a unit. Company sources said strong volume growth was achieved in the lighting, colour television, domestic appliances, components and semi-conductors businesses.    


 
 
TELCO TO SPIN OFF THREE NON-CORE DIVISIONS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 24 
Tata Engineering and Locomotive Company (Telco) today announced it will be forming separate subsidiaries for its transmission, axle and machine tools division. The combined book value of these divisions is in the region of Rs 1,000 crore.

Telco said the transfer of these divisions into three separate subsidiaries is in consonance with its objective of de-merging some of its manufacturing activities to enable the company to concentrate on its core business of design, manufacturing and marketing of vehicles.

The company would look for forging strategic alliances with other companies in these three businesses.

A decision to this effect was taken at a board meeting held today.

A press statement issued by Telco said that the transfer would be undertaken by way of a slump sale (where the liabilities will also be transferred to the new undertaking) for a consideration which would be based on independent valuations. Telco, however, did not say who the valuers are.

The transfer of the heavy duty transmission and axle divisions will help in finalising strategic alliances with world leaders in these businesses.

Telco said it would be in a position to meet its plans of offering an updated range of medium and heavy commercial vehicles.

Commenting on the decision, analysts said that such a move is an accepted practice the world over, with major auto companies focussing on manufacturing and marketing of vehicles.

They added that consequent to this move, the bottomline of Telco would improve although the transfer would be a mere book entry.

A senior analyst further pointed out that money would only flow into the company if Telco ropes in a joint venture equity partner in these ventures.

Telco had in the previous year demerged its construction equipment business where it has Hitachi as a joint venture partner.    


 
 
FORD REVS UP FOR 1.3 LITRE IKON 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb 24 
Ford India is aggressively taking the battle into the lower end of the mid-size segment by announcing its decision to manufacture the Ikon — its latest offering in the market — with a 1.3 litre engine. At present, the Ikon offers engine variants with 1.6 and 1.8 litre capacities.

The 1.3 litre Ikon will take on Maruti Esteem, Fiat Siena and the Opel Corsa; it will also offer a tantalising choice to those customers who were eyeing the premium versions of the Zen, Hyundai Santro, Daewoo Matiz and Telco’s Indica.

The 1.3 CLXi (petrol version) will be available for Rs 4.75 lakh (ex-showroom) in Calcutta.

In another significant move, the company announced that from March 1, the ex-factory price of the 1.6 and 1.8 ZXI Ikon models will be increased by Rs 7500. Currently, the 1.6 CLX1 Rocam petrol and its variants are available ex-showroom in Calcutta from Rs 5.16 lakh onwards.

The Ikon will now be the only model to straddle the market for cars with engine capacities ranging from 1.3 to 1.8 litres.

Ford India managing director Philip Spender said: “With the introduction of the 1.3 litre Ikon CLXi, we have made available a range of Ikon models.”

Analysts say the move clearly indicates that Ford India — a fully-owned subsidiary of the second largest carmaker in the world — is pulling out all the stops in an aggressive bid to grab marketshare and volumes through Ikon.

Ford, a late entrant in the market, has had to overcome a lot of odds before stepping on the gas. To start with, it made a disastrous impact with Ford Escort, its mid-size offering.

Last month the company had sold 1676 Ikons, Spender said. Till date, the company has delivered 4000 cars. The company has 3,600 orders for Ikons on hand.

Analysts explained that while the 1.3L Ikon sports a price tag higher than models like Santro, Zen and Matiz, the company’s strategy is to wean away the potential buyers who would be willing to shell out a little extra for a three-boxed car.

Explaining his company’s move to straddle as many segments as possible, Spender said: “The Ikon has appealed to audiences across segments and has become an aspirational car for customers in the small car segment. Ford India is keen to enlarge the family of “josh” owners”.

“Small car buyers will prefer the Ford Ikon 1.3 CLXI as it makes the desirable affordable,” he added. With economical pricing of spare parts, good servicing and attractive financing, Ford officials hope that the residual value of the car will go up which should attract prospective car buyers.

Vinay Piparsania, general manager-sales, Ford India, said. “The ‘Josh’ theme pervades all aspects of Ford India’s operation in India. In keeping with this spirit, Ford India has unveiled three new Ikon models within the first three months of launching the ‘Josh” machine. Spender announced that the shipments of 1.3 litre Ikon will start from March. It is powered by the 1300 cc Endura-E engine, which is Euro II compliant and has CFC free air-conditioning.

He also declared that Ford Ikon would be fully supported by QualityCare’s, Ford’s branded customer service.    


 
 
GRAMOPHONE GETS READY FOR ACQUISITION DRIVE 
 
 
BY A STAFF REPORTER
 
Calcutta, Feb 24 
After taking over Tamil Nadu-based Sangeeta Music Company, the Gramophone Company of India Limited (GCIL) is eyeing more acquisitions both in India and abroad.

Chairman Sanjeev Goenka told reporters that the company will strengthen its digital music portfolio.

“We are among the strongest music companies in the world and we stand to gain with the copy-right laws becoming more stringent,” Goenka said after the company’s extra-ordinary general meeting.

Gramophone shareholders approved a special resolution to make a Rs 125-crore issue either on a preferential basis or through a private placement. The terms of the offer including the premium will be determined by the board of directors; the issue price will be determined on the basis of prevailing market prices. Goenka said saregama.com was getting one million hits a month, while Saregama plc announced a net profit of £ 4.30 million in London.

He said the promoters stake of 46 per cent in the company would not get substantially diluted after the private placement.

Domestic financial institutions hold 21 per cent of the GCIL equity, EMI International 10 per cent, foreign institutional investors 3 per cent while the rest is held by the public.

Goenka said the proceeds from the issue would be used to reduce debt and acquire other brands.

He said the company was implementing the suggestions of Andersen Consultancy to reduce costs and improve the bottomline.

Goenka said the company’s latest money-spinner are the songs of Kaho Na Pyar Hai with 35 lakh cassettes being sold in the last six weeks.

Buoyed by the report, the company expects to register a growth of twelve per cent during the current financial year, Gramophone grossed a turnover of Rs 123 crore last fiscal.

The other big releases on Gramophone in the future include Mani Ratnam’s Tamil film in which A. R. Rehman has composed the music, Hum Tum Pe Marte Hain, Refugee, One two ka four, Mohabbaten, two Tamil films and as many Telegu films.    


 
 
INSURANCE WATCHDOG TO BE SET UP BY MARCH 15 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb 24 
The Insurance Regulatory and Development Authority (IRDA) will be fully constituted by March 15, IRDA chairman N Rangachary said, adding that the first licences will be issued by October-November as a ‘Diwali gift’ to the new players.

The authority will comprise one full-time chairman, five full-time members and four part-time members, he said. However, the government has yet to decide on the appointments. The present authority is an interim body with only two members, including the chairman.

Addressing the ‘Second global conference of actuaries,’ organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Actuaries Society of India, he said the draft rules for the sector would be circulated soon after the appointment of the Authority.

“We are optimistic that the IRDA will be constituted by March 15,” he said, adding that rules for the new players would be brought out soon after the body was given full sanctity. The players interested in entering the insurance sector will have to file their applications by June-end.

The authority is currently in the process of preparing the regulations for the insurance players in consultation with an advisory committee.

He said that there would be no limit on the number of licences being issued. The regulator would adopt a ‘fit-and-proper’ policy, under which licences would be issued to all those who fit into the regulatory framework, Rangachary said.

Finance minister Yashwant Sinha, in a written speech circulated at the conference, stated that the government is planning to bring in a legislation that will promote and regulate actuaries and empower self-regulatory bodies like the Institute of Actuaries.

He said, “The job of the (insurance) regulator can be made more efficient and effective by empowering and utilising the services of self-regulatory bodies such as the Institute of Actuaries and its members.”

IRDA has a mammoth task before it, that of developing insurance awareness in India and regulating the insurers, Sinha said, adding that the “government is keen that the profession should regulate its members so that they perform their duties in the best possible manner.”

Besides supervising the activities of the insurers, the IRDA also has to provide customers the best safeguards for long-term savings and protect their interests, he said.

With the opening up of the insurance sector, transparency would be the key, Sinha stated.

The number of qualified actuaries in the country is just 130, which is still very small. Sinha said that for developing the actuaries sector, it was important that the would-be professionals were properly trained.

“The examination system therefore has to be rigorous. Training should be strenuous and should be imparted at frequent intervals,” he said.    

 

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