Sensex tumbles 172 points
Satyam Computer planning stock split
One-time fee proposed for e-commerce, telebanking
Coke, Pepsi hike prices of 1 litre bottles
Warren group focus on hotels, tourism
FIs defer funds for mega steel projects
Foreign venture funds in a flap
Foreign Exchange, Bullion, Stock Indices

Mumbai, March 13 
After a frenetic day of trading that saw speculators, financial institutions and foreign investors unleash a wave of selling that battered stocks and sent the bellwether sensex skittering by 172 points, the market regulator withdrew the steep margins at select counters that had precipitated the meltdown in share values.

The Securities and Exchange Board of India (Sebi) said the exchanges have already withdrawn or are in the process of withdrawing the stipulated incremental capital and margins from their top 25 brokers in the form of cash or fixed deposit receipts as it was a measure to be enforced for four weeks only. This was one of the measures that the market regulator had insisted on a few weeks ago.

Sebi also ordered the immediate withdrawal of the additional volatility margins on 10 scrips identified by stock exchanges in terms of volatility, outstanding positions and volumes.

It also withdrew the increase in the daily margins and carry forward by an additional 5 per cent that has been levied since January 14. Similarly, the market regulator withdrew the reduction in capital adequacy linked gross exposure limit by not less than 10 per cent of the existing limit for the brokers of all exchanges.

Further, it agreed to limit the cash component of additional capital and margins to 30 per cent against 50 per cent earlier. Sebi said the rollback was on account of the ‘present conditions of the market”.

The Sebi move may have a positive impact on the market sentiment tomorrow, said a dealer affiliated to Kotak Securities.

Earlier in the day, software scrips, whose sustained volatility forced the market regulator to slap special margins at a number of counters, bore the brunt of the heavy pounding.

The infotech stocks virtually hit the lower end of their trading bands within half-an-hour of the start of trading. The sensex shed 172.56 points after soaring to a high of 5430.87 in the early stages on the BSE. It sank to an intra-day low of 5100.62 before closing at 5129.22, a 3.25 per cent fall from Friday’s close of 5301.72. The broader BSE-100 index tumbled by 113.88 points to 3056.83, down 113.88 points from the previous close of 3170.71.

Dealers also attributed the meltdown in stock values to a domino effect created by the sharp falls in southeast Asian markets .    

Mumbai, March 13 
Satyam Computer Services Ltd today announced plans to split its stock that has a face value of Rs 10.

It is believed that Satyam will bring down the face value of its scrip to either Re 1 or Rs 2 per share. The move will not only enhance liquidity of the scrip but will also attract small investors into the company’s fold.

Apart from Satyam, the infotech majors which have announced stock splits are, Infosys Technologies, Wipro Ltd and Polaris Software Lab Ltd. While Polaris and Infosys have split their Rs 10 share into 2 equity shares of Rs 5 each, Wipro has reduced the face value to Rs 2 per share.

In a notice sent to the stock exchanges today, Satyam Computer said its board of directors would be meeting on March 21 to discuss the issue of stock split. “We have informed the exchanges that the board will be meeting next Tuesday to consider the option of stock split,” a company spokesperson told The Telegraph.

The Satyam scrip witnessed huge volatility today and finished lower at Rs 5810. The scrip opened at Rs 6347 and rose to an intra-day high of Rs 6660 but was hammered down to an intra-day low of Rs 5680. It was only towards the close of trading hours that the scrip showed an upward movement again to finish at Rs 5810.

Satyam, which has targeted to become a fully integrated information technology solutions provider, focuses on consulting, system integration, application development, e-commerce and internet-related activities.

While it has several development centres in the country, it has lined up plans to expand its market reach by opening up more branches in the overseas markets. Apart from the US and Europe, the company is said to be looking at Japan as an growing market for Indian software exports.

Satyam’s subsidiary, Satyam Infoway is presently listed on the Nasdaq. It is the second largest national provider of internet access and internet services to consumers and business houses in India.    

New Delhi, March 13 
The service providers for e-commerce, telebanking, telemedicine and teletrading need not pay a licence fee to the department of telecom (DoT) for launching these services in the country.

The National Telecom Policy 1999 carries a reference to an omnibus category called Other Service Providers (OSP) who have been defined as, “those service providers who utilise infrastructure provided by various access providers for non-telecom services such as e-commerce and telebanking.”

At a recent meeting, the Telecom Commission decided to levy a one-time registration fee instead of a licence fee for OSPs.

The registration certificate is likely to be issued to the OSPs through an autonomous body and will be valid for 20 years.

“We are yet to finalise the registration fee. The committee which was set up to examine this aspect has recommended a registration fee of Rs 50,000. This is to ensure that those entering this service are serious about the business,” said sources in DoT.

According to a note prepared by the Commission, the OSPs should be groups or companies registered under the Indian Companies Act, 1956. The entities covered shall be all those who propose to enter the area of Information Technology enabled services.

“This is an important decision for which in-principle clearance has been given by DoT and will soon be placed before the minister for necessary approvals. With convergence of IT related services, the definition of the term OSP is expanding. For instance, call centres are at present permitted without the payment of any processing or registration fees. “There are many such services about which we will have to take a decision,” sources said.

The committee which submitted its recommendation regarding the terms and conditions for OSPs has suggested,” to make the registration requirements more friendly, the task could be assigned to an autonomous bodies such as National Association of Software Services Companies (Nasscom) or Confederation of Indian Industry (CII).”

However, the note has also suggested that “to ensure examination and assent of DoT/DTS/access providers/long distance access service providers would have to be compulsory. Where the service is to be offered using the radio frequencies, approvals from the Wireless Planning Commission (WPC) will continue to be necessary.”    

New Delhi, March 13 
Soft drink majors Coke and Pepsi have hiked prices of their 1 litre bottles from Rs 25 to Rs 27, and are contemplating a similar move for the popular 300 ml bottle, following the 40 per cent excise duty slapped on the industry.

In Calcutta, where the 1 litre bottle sells for Rs 23, the extent of the hike was not known.

Industry watchers aver that while only a hike in the price of the 300 ml bottle, which contributes about 85 per cent to the companies’ turnover, can make a substantial difference, any such move may affect the sales volumes of the soft drinks manufacturers.

Sources added that the companies are undertaking a cost-benefit analysis of such a hike.

The soft drinks industry, which is mainly driven by volume growth, is also very price sensitive and a rupee difference can result in a considerable dip in volumes, affecting the companies’ bottomline.

However, both Coke and Pepsi are not financially on strong ground at the moment to be able to absorb the excise duty hike. Both are hence lobbying hard to get the excise duty rate eased.

Pepsi chief P. M. Sinha had urged finance minister Yashwant Sinha to reconsider the penal excise rate on soft drinks, arguing that it should not have been clubbed together with paan masala and gutka, which are considered injurious to health.

Hence, while persisting with efforts to get the excise duty hike reviewed, the companies are experimenting with a price hike on 1 litre bottles which contribute only 4 per cent to their total turnover.

Industry sources, however, say the hike was long overdue. The 1 litre pack which is manufactured in plants outside Delhi, entails payment of a toll tax, which, added to the sales tax and distribution costs, rationalises the increase, sources said.    

Calcutta, March 13 
The Vinay Goenka-controlled Warren group has drawn up elaborate plans to enter the tourism, hospitality and entertainment businesses in a big way.

To begin with, the group will acquire two three-star hotels, one in Jaipur and the other in Udaipur. “The deals will be finalised by the end of this week. Actually, there are four properties, two in Udaipur and two in Jaipur, but we will first buy only two,” Warren Tea president and managing director Vinay Goenka said. Garg & Co, a Jaipur-based solicitor firm, is completing the legal formalities of the acquisition.

The company had also identified a hotel in Jaisalmer but Ernst & Young, which had been appointed to carry out a due diligence on all properties the company wants to acquire, suggested that buying it would not be a viable proposition.

The group is also holding talks with overseas hotel chains keen to enter India. “We would like to invest in greenfield hotel projects as a joint venture partner with foreign majors,” Goenka added. The group also intends to make a foray into entertainment by setting up aqua amusement parks.

Meanwhile, Darjeeling Plantation Industries Limited (DPIL), in which Goenka holds 73 per cent, recently acquired two tea companies — Katalguri Tea Company Ltd (KTCL) and Eriabarie Tea Company Ltd (ETCL). The buyouts will take the production of the company, which has been renamed DPIL Ltd, to three million kgs. Eriabarie owns the Tippuk tea estate. Goenka said group firm Lectra Tracom, which markets edible commodities in West Asia, has entered into a tieup with Pineapple Super Markets, an Iranian marketing chain. This will help the Warren group to market tea in the countries of the region.    

New Delhi, March 13 
Financial institutions (FIs) have once again deferred funding the large ‘last mile’ steel projects involving investments of few hundred crores. They have, however, decided to help the completion of steel projects with small fund requirements of about Rs 30-40crore.

Sources said the institutions would negotiate separately with the promoters of big projects to meet their funding requirements. Such promoters include the Essars, the Jindals and the Mittals of the Ispat group.

The sources added that the promoters have decided to work out funding plans for their projects.

Essar officials had again put up the issue of refinancing its floating rate notes (FRN), which was rejected by the FIs.

Steel secretary A. Basu said FIs and banks need to ascertain the impact on their bottomline before it agrees to finance the steel projects. “The banks and FIs must not ruin their health by giving loans that cannot be recovered. Their heath is most important.”

The meeting was attended by steel minister Dilip Ray, representatives of the committee on steel and producers whose projects, nearing conclusion, have got stalled due to non-availability of funds.

Companies like Ispat Industries, Essar Steel, Jindal Vijaynagar, Usha Ispat, Malvika Steel, MidEast Steel, Bellary Steel and SJK made individual presentations to the committee.

The committee on steel has representatives from IDBI, ICICI, IFCI and SBI and senior officials of commerce, power and coal ministries. The committee, called the project co-ordination group, had its first meeting today. The meeting was meant to iron out the problems faced by various steel producers.    

Mumbai, March 13 
Foreign venture capital funds are having second thoughts about registering themselves in the country after the budget imposed a 20 per cent tax on dividend.

Instead, they feel it would be better to be based abroad and bring their funds to India because doing so would help them avoid paying the tax.

“The budget proposals have forced us to rethink on registering our fund here,” Raj Kondur of the $ 65-million Chrysalis Capital, the largest infotech and Internet-focused venture capital fund in India, said. Earlier, the Mauritius-based company had drawn up plans to get itself registered in India.

According to Kondur, the advantage of being a local venture capital fund is that it cuts the response time and helps speed up investments. “Instead of routing proposals through the Foreign Investment Promotion Board (FIPB), something that we are now doing, we could have gone directly and invested.”

The impediment to register funds here has risen mainly on account of the 20 per cent tax on domestic venture capital funds. However, this is not applicable to funds registered in Mauritius, a country with which India has a double-taxation avoidance treaty.

The Securities and Exchange Board of India (Sebi), which was recently given the responsibility of monitoring venture capital funds, has argued that the dividend tax will discourage local firms and defeat the government’s objective of encouraging venture capital funds to register in India.

Industry circles expect venture capital funds to catapult India into top 5 global locations for technology ventures.

A recent study by Nasscom expects inflows to increase a whopping 120 per cent to Rs 3,200 crore by the end of the next financial year. Inflows surged by over 100 per cent over the previous year to touch Rs 1400 crore in 1999.

According to Nasscom, of the estimated $ 30 billion worth of venture capital invested in the US in 1999, approximately 80 per cent went to technology firms.

It is expected that India, with its strengths in innovation and infotech, will attract venture capital funds. In 1999 alone, 11 new funds were registered with Sebi, taking their total number to 19.

Venture capital, which is also known as Angel Investments in high-tech firms in India, has grown by over 2000 per cent from Rs 70 crore to Rs 1400 crore between 1996 and 1999. Nasscom expects the figure to rise to Rs 45,000 crore by 2008.

According to the association, venture-backed IPOs earn a return of 44.6 per cent over a typical five-year holding period after listing, compared with 22.5 per cent in the case of non-venture backed IPOs. However, this may change with the 20 per cent dividend tax.    

Foreign Exchange
US $1	Rs 43.57	HK $1	Rs. 5.55*
UK £1	Rs 68.79	SW Fr 1	Rs. 25.80
Euro	Rs 42.25	Sing $1	Rs. 25.25
Yen 100	Rs 41.38	Aus $1	Rs. 26.30*
*SBI TC buying rates; others are forex market closing rates


Calcutta		Bombay
Gold Std (10gm)	Rs 4620	Gold Std (10 gm)	Rs 4585
Gold 22 carat	Rs 4360	Gold 22 carat	Rs 4240
Silver bar (Kg)	Rs 7900	Silver (Kg)	Rs 8020
Silver portion	Rs 8000	Silver portion	Rs 8025

Stock Indices

Sensex	5129.22	-172.56
BSE-100	3056.83	-113.88
S&P CNX Nifty	1560.70	-42.05
Calcutta	115.86	-3.08
Skindia GDR	NA	NA

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