Rupee plunges to 44.16
Caution bell for debtor Bengal
ITC net profit surges 27% to Rs 792 crore
SRF aims to double capacity in yarns
Indal net jumps 10%
BPCL focus on marketing
Maruti slips on sales highway
Lever’s Banga bubbles with hope
Foreign Exchange, Bullion, Stock Indices

Mumbai, May 24 
The rupee tested a new low of 44.15/16 against the dollar today as banks rushed to scoop up greenbacks amid predictions from analysts that the currency could lose more ground over the next few days.

When trading closed for the day, the rupee had lost a whopping 12 paise over its previous finish of 44.02/03 on Tuesday.

Today’s slide prompted predictions that the currency will continue to witness a slight, but continued, depreciation in the immediate future. The forecast is based on expectations that dollar supplies will remain thin. Worse, there were even fears voiced by many that there will be net outflows given the bearish phase on stock markets across the country.

Some figures suggest that foreign funds were net sellers of over $ 143 million so far this month. Another worry is the country’s dwindling foreign exchange reserves which were pegged at $ 37.63 billion on May 12. This represented a $ 102 million decline over the May 5 level. “Negative dollars flows will certainly put a lot of pressure on the rupee and the forex markets, unless the Reserve Bank of India (RBI) intervenes through State Bank,” a senior dealer with a foreign bank said.

“If the demand for dollars remains the way it is, we are all in for a weaker rupee. I see the currency being pulled down to the 44.20 level,” said Sangya Nigam, an analyst with Mecklai Finance.

Despite a generally bearish outlook in a large section of market, there were a few analysts who felt the rupee would recover some of its losses, move in a narrow range, and hover around the 44.10-mark.

Today’s close, which surpassed the previous record low of 44.08 recorded on May 10, was caused by sustained dollar demand — induced by short-covering — that continued through the day.

Further, there was no attempt made by the State Bank of India (SBI) to limit the fall of the rupee.

The rupee opened at 44.04/06, but declined below its previous trough of 44.08 per dollar within minutes, plumbing a fresh low of 44.10/12. At this point, say some dealers, a large state-owned bank was believed to have sold greenbacks. Though the selling perked up the rupee to an extent, other factors such as a surge of dollar demand from importers, a bout of speculative trading and, above all, limited dollar supplies, sent the rupee tumbling .    

New Delhi, May 24 
The Planning Commission has advised the West Bengal government to reduce its dependence on borrowing to finance the state’s plan.

In the last three years, the interest outgo on the state’s debt doubled from Rs 2500 crore to Rs 5000 core, which the Planning Commission feels is an alarmingly high level considering the precarious nature of the state’s finance.

The contribution of state’s own resources to the plan has been negative for quite some time. The situation is unlikely to change unless the government mops up more revenue and rein in non-plan expenditure.

Such an improvement cannot be expected from the state’s administration which has been consistently shying away from hard options.

West Bengal depends heavily on small savings to finance the plan. In fact, its borrowing from small savings (Rs 4500 crore) was more than the size of its annual plan (Rs 4000 crore) for 1999-2000.

For the current year, the budgeted annual plan size is Rs 6343 crore of which the Planning Commission approved a core plan of Rs 5658 crore.

The gap of Rs 685 crore is sought to be bridged either from transfers of resources arising out of the recommendations of the Eleventh Finance Commission or through negotiated loans. The borrowing from small savings will be Rs 4700 crore in the current year.

The state government also uses its Infrastructure Development Finance Corporation to borrow money.

The CPM government has assured the Centre the state public sector units (PSUs) would be reformed. However, it is opposed to the idea of privatisation.    

Calcutta, May 24 
ITC Limited today unwrapped a better-than-expected performance for 1999-2000 which was crowned by a 27 per cent surge in net profit at Rs 792.44 crore compared with Rs 623.42 crore in the last financial year.

The gains, fuelled largely due to tighter cost controls, better money management, fatter margins ( up almost 35.12 per cent) and a stronger brand equity, came in a year when demand in the tobacco market remained sluggish and volumes modest.

The board decided to reward shareholders with a 75 per cent dividend as against 55 per cent last year. Investors, however, appeared unimpressed as the ITC share closed Rs 30 lower on the Calcutta Stock Exchange (CSE) at Rs 639.40. The fall was sharper on the Bombay Stock Exchange where the scrip fell by Rs 37 to Rs 639.

The financials remained sound, capped by a pre-tax profit of over Rs 1,000 crore at Rs 1228.95 crore. Measured against last year’s Rs 938 crore, it marks an increase of 31 per cent.

Gross income increased only 4.78 per cent to Rs 8069.37 crore from Rs 7700.96 crore in 1998-99. Net income, after excise duty and before other income, jumped to Rs 3935.48 crore from Rs 3637.71 crore.

The debt-equity ratio was an impressive 0.23 — an indication that the company has managed its finances well.

Strong cash flows gave the company enough leeway to retire a large amount of debt, including foreign currency loans which are prone to exchange rate volatility, and bring down debt.

At the same time, the company’s interest costs were reduced by a sharp 27 per cent. The combined effect of better cost and asset management was reflected in an improved 39 per cent return on its net assets.

Nevertheless, the strong financial performance failed to conceal the slowdown in cigarettes, ITC’s mainstay. An indication of this was available in the lower consumption of raw materials used to make cigarettes.

The amount spent on this decreased to Rs 1515.95 crore as against Rs 1549.38 crore in 1998-99.

Foreign exchange earnings from hotels and exports stood at Rs 836 crore, up from Rs 772 crore. “The growth was achieved despite a difficult global trading environment, especially the persistent over-supply of leaf tobacco and the decline in export of agricultural products,” a company release said.

A highlight of the accounts was the scrapping of a contingency reserve, with no funds provided for it in 1999-2000. Last year, the company provided Rs 60 crore in the precautionary kitty. The board, however, set aside Rs 600 crore for the general reserve compared with only Rs 400 crore last year.

After carrying forward Rs 201.28 crore and Rs 224.55 crore for the payment of dividend including dividend tax, ITC’s reserve excluding revaluation reserve improved to Rs 2489.84 crore at the end of the last fiscal against Rs 1921.95 crore.

The financial performance resulted in an improved earning-per-share (EPS to Rs 32.29 against Rs 35.40 at the end of 1998-99.    

New Delhi, May 24 
The Arun Bharat Ram-promoted SRF Limited plans to achieve an annual capacity of 50,000 tonnes in industrial yarn and fabrics by next year by adopting a strategy that combines low-cost domestic and overseas acquisitions, alliances and de-bottlenecking. Its current capacity is 42,000 tonnes.

Arun Bharat Ram said the his is poised for a turnaround after three years of slow growth. The company’s net profit this fiscal almost doubled to Rs 26.6 crore from Rs 13.5 crore last year. The turnover increased to Rs 665 crore from Rs 570 crore.

SRF managing director Ravi K Sinha said his company’s debt has come down from Rs 608 crore in 1996-97 to Rs 429 crore in 1999-2000; the average interest burden has fallen from Rs 114 crore to Rs 95 crore. As a result, the debt-equity ratio has also declined from 2.8 per cent to 1.4 per cent. There has been a reduction in working capital from Rs 186 crore in March 1997 to Rs 110 crore in March 2000.

He attributed the turnaround to some aggressive cost-cutting across the board. These included improvements in the input-output ratio, reductions in the fixed cost and de-bottlenecking. The company also pulled out of non-core businesses, which include its vision care division, SRF Finance, SRF Nippondenso, SRF International , Shriram Needle Bearing and SRF Nippondenso Ltd. More important, SRF has also completely delinked itself from DCM Ltd. Bharat Ram said SRF will be professionally run, and that none of his two sons will be involved in the management of the company.    

Calcutta, May 24 
Indian Aluminium Company Ltd (Indal) has registered a 10 per cent jump in its net profit at Rs 83.9 crore in 1999-2000. The previous year’s net profit was Rs 76.4 crore. The company’s turnover stood at Rs 1049.7 crore against Rs 1021.6 crore in 1998-99 while the pre-tax profit grew by 19 per cent to Rs 109.3 crore from Rs 92.2 crore.

The improvement was largely due to exports which increased by 41 per cent to Rs 256.6 crore from Rs 182.5 crore. Addressing a press conference after the company’s board meeting here today, Chris Bark-Jones, chairman & CEO, said the price realisation from exports was much better last year.

While the export volume of metallurgical alumina increased by 26 per cent, for speciality alumina it rose by 61 per cent over the previous year, he said.

On the takeover of Indal’s Canadian parent Alcan’s share by the Hindalco, Bark-Jones said the share transfer was expected to be completed by next week.    

Calcutta, May 24 
Bharat Petroleum Corporation Ltd (BPCL) has decided to invest Rs 850 crore in the current financial year to gear up its marketing network in view of the oil sector deregulation in 2002. BPCL director (marketing) S. Behuria said Rs 200 crore would be invested in strengthening the retail network and Rs 250 crore for the LPG division out of the total investment. The company is expecting an eight per cent growth in its turnover of Rs 30,000 in 1998-99 although the profit would be maintained slightly over Rs 700 crore. The company board will meet soon to finalise its financial results.

BPCL has also decided to raise its stake in Numaligarh Refinery from 32 per cent to 51 per cent with an investment of Rs 170 crore.    

New Delhi, May 24 
While the newcomers on the block, Hyundai, Telco, Hyundai, Daewoo, Ford and General Motors went on a hot season sales overdrive, market leader Maruti Udyog Ltd reported falling sales.

Maruti reported a negative sales growth in April this year as its market share plummeted to an all time low of 56.3 per cent from a high of 74.6 per cent a year ago, with its rivals clearly gaining at its expense.

Telco recorded a 66.5 per cent growth in sales in April over the same month last year. The company sold 5,211 units during April this year, as against 1,743 units during April 1999.

On the other hand, Maruti’s sales in April this year of 30,016 units, saw a 4.2 per cent decline from 31,351 units sold during April 1999, besides posting a negative growth of 39.1 per cent as compared with 41,766 units sold in March 2000.

The passenger car segment recorded a growth 21.4 per cent in sales at 53,499 units during the month of April 2000 compared with 42,042 units sold in the same month of 1999.

Korean car majors Hyundai and Daewoo also posted improved sales figures.

Daewoo Motors India Ltd (DMIL) recorded a sales growth of 80.16 per cent in April this year over April 1999. However, sales in April registered a negative growth of 22.6 per cent, compared with figures in March 2000.

Rival Hyundai Motors India Ltd (HMIL) recorded a 51.6 per cent growth in sales at 7,305 units sold during the month of April 2000 as against 3,531 units sold in April 1999. However, sales in April 2000 fell by 15.3 per cent as against 8,425 units sold in March 2000.

Ford India Ltd recorded an 89.6 per cent sales growth with 1,592 units sold in April 2000 as against 165 units sold during the previous corresponding month. General Motors also recorded an impressive 64.7 growth in sales at 573 units sold in April this year, as against 202 units sold during April 1999.

Sales of Hindustan Motors slumped by 19.8 per cent to 1,559 units in April 2000 as against 1,889 units during April 1999. Fiat India Ltd also recorded a 23.1 per cent fall in sales at 1,191 units during April 2000, as against 1,467 units sold during the same month last year.

Meanwhile, the two-wheeler industry, with 3.16 lakh units sold in April 2000 as against 2.75 lakh units in April 1999, recorded a 13.05 per cent growth, owing to a good showing by the motorbike segment.    

Mumbai, May 24 
From a company known to unleash a blitzkrieg for launching its products, it was a rather ‘soft’ launch. Manvinder Singh Banga, 45, the youngest ever chairman at Hindustan Lever Limited (HLL), was introduced informally to the press today.

While things are picking up pace at Lever, the man in the hot seat was relaxing on a sofa at Lever House. Banga, popularly known in Lever circles as Vindi, spoke on a host of subjects, including his initial days in HLL as a management trainee at Etah, in Uttar Pradesh.

“I am telling my people that we have to move at the speed of the internet in everything we do,” Banga said, adding that with the Net getting faster by the day, it will be a tough task to keep pace with it in the days to come.

Banga is also aware that with the dotcom revolution under way, the biggest challenge faced by the FMCG behemoth will be retaining and hiring talent.

“We have to win the war of talent,” he declared and added that “it is people who are fundamental for any company’s success.”

The 12th HLL chairman further emphasised that the company cannot rest on its laurels, especially since today’s youth have a plethora of choices before them.

He said the company had to keep pace with the times and change its image to that of a youthful company — one which incorporated youthful values like speed and transparency and encouraged entrepreneurial abilities of its employees.

Banga remained unfazed by the slowdown in HLL’s topline sales growth. “I am interested in volumes growth, selling more lipsticks, more shampoo sachets and thus positively impact the bottom line,” he claimed.

Banga said that “HLL will work in three different time horizons.” This, he clarified, meant growing in the business of today, while investing heavily in tomorrow’s businesses (like the laundry business, beauty saloons) and actually developing the businesses for tomorrow.

As regards the consumer, he stated that “She is the judge, she is canny and she is smart. We have set up a call centre called ‘Hello Hindustan,’ where consumers are invited to talk on any issue concerning the company’s products.”

Incidentally, Banga has committed that in the years to come, 25 per cent of HLL’s managers will be women.

He said HLL would tackle every segment to straddle the entire market place. “We will go where the opportunity exists,” he said and added that for this it was essential to be the lowest cost producer. “HLL’s business strategy in the future will be to focus on the centre of the Indian plate and not on peripheral products. For this, it will heavily invest in the popular food segment,” he added.    

Foreign Exchange
US $1	Rs 44.16	HK $1	Rs 5.55*
UK £1	Rs 65.15	SW Fr 1	Rs 25.20*
Euro	Rs 40.20	Sing $1	Rs 25.05*
Yen 100	Rs 41.23	Aus $1	Rs 24.75*
*SBI TC buying rates; others are forex market closing rates


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