FII buys Rs 2000 cr of Reliance
Sensex up 23 points in relief rally
Dadiseth gives Lever a 9-point growth legacy
Birla Mutual unfazed by market volatility
Sterlite net leaps 68%
Sinha stays elusive on rollback
UTI bubbles with ideas as kitty swells

 
 
FII BUYS RS 2000 CR OF RELIANCE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 25 
Reliance Industries Ltd today disclosed that Janus Capital Corporation (JCC), a leading FII based in the US, had picked up a 5.64 stake in the flagship company of the Ambanis at an investment of Rs 2000 crore.

This is the largest investment ever made by an FII in the equity of any single Indian company through either the primary or secondary market route.

In a communication sent to the stock exchanges, Reliance said it had received information from Janus that the FII had picked up 5.94 crore equity shares of the company, which represents around 5.64 per cent of RIL’s share capital of Rs 1,053 crore. The purchase had been done on behalf of various mutual funds and other accounts. The shares were acquired from the secondary markets over the past three weeks and, based on RIL’s average share price of around Rs 325 in this period, the value of this investment worked out to around Rs 2,000 crore ($ 500 million).

The deal represents over 30 per cent of the cumulative net FII investment of $ 1.5 billion into India in this calendar year.

The total investment by international investors in Reliance now exceeds 23 per cent of its equity share capital. At current market prices, this is said to represent a value of about Rs 10,000 crore.

Janus, based in Denver, Colorado, is considered to be among the largest value based and long term investors alongside Capital International, Fidelity and Templetion. While it currently has $ 350 billion in total assets under management, it operates 39 US-based mutual funds. Some of the major holdings of Janus include GE, AT&T, Nokia, Sony, AOL Time Warner, Cisco, Sun Microsystems, Microsoft, Vodafone and Viacom among others.

Market circles said the huge investment by Janus not only reflected the appreciation of RIL’s fundamental strengths but also the importance of some old economy stocks, particularly at a time when several prominent ICE stocks had taken a sizeable beating. On the Bombay Stock Exchange (BSE) today, the Reliance scrip, after showing some volatility, closed stronger, gaining Rs 9 at Rs 334. The scrip, after opening at Rs 322, rose to an intra-day high of Rs 338. While rapid selling by speculators brought it down to a low of Rs 310, substantial buying by both domestic and foreign institutions, resulted in the scrip finishing at Rs 334.

While the RIL scrip has been in the buy list of several foreign funds, the buying has increased after the announcement of a buyback and good annual results.

Though the buyback of RIL shares was fixed at Rs 303 per share, market circles say the Rs 300 price level is likely to act as a major support for the scrip. This is because, FIIs are reported to have bought nearly 6 crore shares at that level. Coupled with this trend, a potential buying of 4 crore shares under the buyback programme plus the possibility of a creeping acquisition of 5 crore shares by the RIL promoters is not ruled out.    


 
 
SENSEX UP 23 POINTS IN RELIEF RALLY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 25 
It was a relief rally on Dalal Street today when the Bombay Stock Exchange (BSE) ended its streak of losses to close 22.94 points higher at 4533.99 in a rebound fuelled by foreign institutional investors and local institutions.

Technology bellwethers like Infosys, NIIT, Satyam Computer and Zee Telefilms remained locked in their lower-end filters. This was the time when reports of a 168-point fall in the Nasdaq Index swirled in the market.

Speculators, keen to square up positions on the last day of current settlement on the National Stock Exchange, turned panicky and swarmed counters with sell orders. “The markets are not looking at price earnings. There is great value out there,” said an analyst. Taking advantage of the low prices, foreign institutional investors (FIIs) and financial institutions made heavy purchases in Satyam Computer, Infosys Technology, Reliance, NIIT and Zee Telefilms and caused a late-session rebound.

Rumours that the Centre would allow provident funds to invest a part of their corpus in stock market played a key role in the reversal of sentiment which had been decidedly downbeat.

UTI chairman P S Subramanyam who was in Calcutta was caught up in the stock market action. When the market was down by more than 200 points, his mobile began to ring, but he ignored it. A UTI official passed him a slip informing him of what was believed to be frantic calls from the finance ministry.

Subramanyam zipped into the adjoining room, bringing the press conference to a halt. Later, he denied he had spoken to finance minister Yashwant Sinha, saying, “That, too, is a market rumour”. His phone rang again just as he was ending the meeting. After a couple of nods, he spoke in into the phone: “Apne woh keya jo mena apko kaha tha” (you did what I had asked you to do). After he finished, he told reporters that the market was up 6 points and, may be, his visit to the city was a good omen.    


 
 
DADISETH GIVES LEVER A 9-POINT GROWTH LEGACY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 25 
Hindustan Lever (HLL) has picked nine tools to achieve its daunting target of doubling its turnover every four years. These include floating an internal venture capital fund and making greater use of the internet to beef up sales operations and supply management.

In his final appearance before shareholders as the Lever chairman before he passes on the baton to M S Banga at the end of this month, Keki Dadiseth unveiled a strategy that aims to foster future growth by creating fresh demand at the lower end of the market and taking advantage of the shifts in demand patterns at the higher end of the scale.

“Our new growth engines will become thriving businesses of significant sizes over the next 6 to 8 years. They will help us accelerate new demand at the lower end of the market and capture value from shifts in demand in the premium segment,” Dadiseth told shareholders in his final AGM speech.

The meeting saw frequent interruptions by shareholders who wanted to felicitate the three top managers —Dadiseth, Vindi Banga who will takeover as the chairman later this month and M K Sharma, the new vice-chairman. The AGM passed the resolution which sought to split the Lever share from its current face value of Rs 10 into 10 shares of Re 1 each.

Responding to compliments from shareholders for steering the company efficiently and successfully, Dadiseth, at times a trifle embarrassed, only attributed the gains to team effort.

Taking a cue from the ICE companies, he announced that Lever will introduce a stock grant scheme this year. “We see it as a powerful encouragement for our people and a key driver for institutionalising a culture that seeks growth,” he said.

On the internet foray, Dadiseth said a Web-enabled army of stockists, suppliers, banks and even potentially top retailers will create the most capital-efficient supply chain optimised for handling product, cash and information flows.

Elaborating the company’s plan for the future, he said the company’s nine growth engines are made up and led by hand-picked teams of high-performing managers. These engines are being insulated from our existing businesses and being incubated under the direct tutelage of the board and the recently appointed new ventures director, D Sehgal.

“We are becoming the nation’s grocer. Our endeavour is to meet the everyday needs of customers everywhere,” Dadiseth told a shareholder On the all-important rural business system, he said Lever will invest in communication and information technology to establish connectivity in the distribution system at a scale never attempted before. He said the acquisition of Modern Foods had given Lever will have an outright 6 per cent share in the bread market.

When shareholders pestered him for a liberal bonus issue, Dadiseth neatly side-stepped it, saying his successor will consider the pros and cons of the issue. “My views on bonus shares are well known,” is all he would say to those clamouring for it.

Dadiseth said the long-term success of a company depends on winning the ‘war for talent’ by attracting developing and retaining the best brains.    


 
 
BIRLA MUTUAL UNFAZED BY MARKET VOLATILITY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 25 
The turbulence witnessed in the stock market over the past few days has drained Birla Advantage Fund (BAF) of Rs 25 crore in the month of April.

Despite the fall, which had led to not only declining net asset values (NAV) but also redemptions from panic-stricken investors, S K Mitra, director, financial services, AV Birla group said that Birla Mutual Fund has received substantial investments from investors with a long-term view.

Speaking to newspersons on the state of the markets and mutual funds, Mitra stated that BAF received net subscriptions of over Rs 147 crore in the month of March. He added that in spite of factors like investors booking their gains for tax considerations, due to the extreme turbulence witnessed in the equity markets and the month historically being a lean one, BAF saw a net outflow of Rs 25 crore in April.

Between its equity and balanced funds, Birla Mutual Fund manages assets in excess of Rs 1500 crore as of April 24. BAF, its flagship fund, alone manages assets in excess of Rs 650 crore.

Bharat Shah, chief investment officer, said that the mutual fund is of the belief that Indian technology stocks are fundamentally very solid and with well-defined revenue models, strong sustainability and high growth prospects, with many of them being world-class companies.    


 
 
STERLITE NET LEAPS 68% 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 25 
Sterlite Industries (India) Ltd has posted a 68 per cent jump in net profit at Rs 63.06 crore for the third quarter ended March 31 compared with Rs 37.58 crore in the corresponding period of the previous year.

At a board meeting held here today, the directors decided to issue one equity share with a face value of Rs 5 each in the newly formed telecom company for every fully-paid up equity share of Rs 10 held in the parent company. The face value of the Sterlite share will also be reduced to Rs 5 after the demerger of the telecom business. Similarly, shareholders of group firm MALCO, which is to be merged with the parent, will receive one Sterlite share of Rs 5 each (after demerger of telecom business) for every two fully paid-up equity share of Rs 10 each held by them. The present equity capital of Sterlite comprises 5.59 crore equity shares of Rs 10 each aggregating Rs 55.91 crore. After the demerger of its telecom business, the equity capital of the new telecom company will comprise of 5.59 crore equity shares of Rs 5 each aggregating Rs 27.95 crore.

Thus, the equity capital of Sterlite (metals business) will comprise 6.71 crore equity shares of Rs 5 each (inclusive of 1.12 crore shares of Rs 5 each to be allotted to the shareholders of MALCO on merger) aggregating Rs 33.58 crore.

Turnover in the third quarter increased to Rs 735.7 crore as against Rs 510.07 crore.

ISPL net dips

Indian Shaving Products Ltd (ISPL), a subsidiary of Gillette, recorded a marginal decline in its net profit to Rs 3.73 crore in the first quarter (January-March) of 2000 from Rs 3.81 crore in the corresponding period last year. Sales of the company increased by 18 per cent to Rs 52.23 crore during the period from Rs 44.01 crore in the previous corresponding period. “High outlays for launching new products resulted in a marginal dip in net profit in the first quarter,” ISPL managing director Zubar Ahmed said.

NPIL fares well

Nicholas Piramal India Ltd (NPIL) has posted a 26 per cent growth in net profit at Rs 56.95 crore for the year ended March 2000, on a sales of Rs 486.48 crore, a 13 per cent growth over the previous year.

Total income, including sales, dividend from joint ventures and other income, also increased by 12.45 per cent at Rs 504.73 crore for the year.    


 
 
SINHA STAYS ELUSIVE ON ROLLBACK 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 25 
Finance minister Yashwant Sinha today preferred to remain vague on the possible rollback of certain budgetary measures.

Addressing the annual session of the Confederation of Indian Industry, Sinha said “If I make any change (in the finance Bill), I will not be the first finance minister to do so nor will I be the last finance minister.”

He reiterated the government’s commitment to push through second generation reforms. “It is not a question of rollback. As far as fundamental issues are concerned there cannot be any compromise,” he said. The minister declined to elaborate on the fundamental issues and said he would leave it to the audience to guess.

Allies of the ruling BJP-led coalition government have been demanding a rollback of foodgrain prices and restoration of subsidies. Opposition parties, when they were in power, had backtracked on their economic policies, Sinha said and added that the present Vajpayee government was just continuing with the policies initiated by them.

“If we are being criticised today, it is because we are in power, others are not. If they come back, they will do the same thing.”

He said there was need for consensus among political parties on social, economic and foreign policy issues. This was now weakening and becoming a victim of party politics.

Sinha made a renewed effort to highlight the government’s commitment to alleviate poverty and generate employment. “The number one priority of our government is to remove poverty and generate employment,” he said.

In order to reduce poverty and increase employment, the country would have to achieve a GDP growth rate of 8-10 per cent. The second generation reforms would focus on these. Future policies must take care of the people’s basic requirements like water, food, shelter and medical facilities.

“Initiatives need to be taken on these issues if we have to achieve our objectives,” he added.

Sinha accepted that government finances were under pressure due to “dissavings” in the public sector and government expenditure. He said previous governments had adopted policies for short term gains which had cost the exchequer dearly and said the NDA government was working towards a long-term policy to bring all round prosperity.    


 
 
UTI BUBBLES WITH IDEAS AS KITTY SWELLS 
 
 
BY OUR SPECIAL CORRESPONDENT
 
Calcutta, April 25 
Unit Trust of India (UTI), having emerged from the recent selling avalanche on stock exchanges almost unscathed, has set its sights on a net collection of Rs 17,000 crore by June, lined up four growth-sector funds and mapped out a high-investment plan to harness the benefits of technology for servicing its massive pool of investors.

It is riding high on the success of its offshore media communication fund — placed by Societe Generale — which garnered $ 60 million in just the first tranche, and its offshore infotech fund whose unit is now valued 11 times at $ 110. Collections from offshore funds will largely be invested in the stocks of companies focused on infotech and internet.

Addressing a press conference in the city today, chairman P. S. Subramanyam said UTI mobilised Rs 1,269 crore under all its schemes in March alone. Flagship scheme US-64 accounted for more than half of this, netting Rs 706 crore.

The reserves and surplus of US-64 swelled to over Rs 4,200 crore at the end by March from Rs 130 crore in June 1999. The figure includes fresh sales of Rs 2780 crore during the year. By the time the books are closed in June, an additional Rs 1500-Rs 1800 crore is expected to flow into the kitty.

The country’s largest mutual fund has under its sleeve a quartet of funds devoted to global investments, telecom, commodity and automobiles. Its board of trustees will decide when to the launch them at a meeting scheduled for April 27. A special fund that meets the investment objectives of those who opt for VRS offers will be launched shortly, Subramanyam said.

UTI has earmarked Rs 100 crore for technology upgradation to be carried out in a manner recommended by McKinsey. Tata Consultancy Services will provide the software and issue unique, PAN-like identification numbers to all UTI investors. The objective is to beef up the technological support of UTI Investor Services, which is expected to handle one crore folios, up from 64 lakh at present.

The Trust also intends to make life simpler for unit-holders. As part of these efforts, it will soon introduce a common form for investors in eight equity schemes from tomorrow. An ‘Anywhere mutual fund’ facility will also be launched soon.

The MIP dividends for April and May will be sent together at the end of this month. The payments were held back because of expectations that the government will roll back the two-fold hike in dividend tax in response to a representation made by the Association of Mutual Funds of India (AMFI).

The eastern region has contributed handsomely to UTI’s collections. Fresh sales have surpassed Rs 1100 crore in the nine months to March, prompting the mutual fund major to open UTI Financial centres in south and north Calcutta over the next three months, apart from Rourkela and Orissa.

Meanwhile, UTI Bank is investing up to Rs 80 crore in internet banking, payment gateways and a host of other retail products in a tieup with Infosys Technologies, Subramanyam said. This is being done to get better valuations ahead of a possible ADR floatation.    

 

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