Competition law to carry penalty
DoT fires fresh salvo at regulator
Rupee hits new low, sensex rallies
DCA tracks down 24 phantom companies
BNP Paribas to foray into insurance, e-broking
IOC offers 2 dividends as net vaults 10.4%
Foreign Exchange, Bullion, Stock Indices

New Delhi, June 2 
The competition law that is currently being drafted plans to impose heavy monetary penalties on errant corporates as a deterrent punishment.These penalties will be a fixed percentage of the company’s total turnover.

The penalties will be graded according to the gravity of the offense by the Competition Commission of India (CCI). The law is currently being drafted on the basis of the competition policy recently submitted to the government.

“Prosecutions are time consuming and corporates find ways to wriggle out of it. A system of instant penalties is the best form of punishment,” say sources quoting a member of the Raghavan committee which drafted the competition policy.

Companies can go on appeal against these penalties only before the Supreme Court and not high courts. This obviously means the possibilities of stalling the payment of penalties will be considerably reduced.

The committee has also recommended that the competition law once enacted should be implemented only after a hiatus of one and a half years to two years to give ample time to Indian industry to restructure itself and face global competition.

CCI will be the sole recipient of all complaints against infringement of the Indian Competition Act from any source — an ordinary citizen, business firm or any other entity including the central and state governments. The director general will not have any suo motu powers of investigation. He will examine only such complaints received from the competition Commission.

Under the Monopolies and Restrictive Trade Practices (MRTP) Act, there is a requirement for registration of agreements relating to restrictive trade practices.

The new competition law should scrap the registration requirements altogether. The investigative staff of CCI will not be drawn routinely from Department of Company Affairs. The staff will be recruited on the basis of their expertise in investigation.

Every company through its board of directors will have to nominate a compliance officer who will be responsible for ensuring compliance with competition law. He will have to face the consequence for any breach of the law. The whole-time directors including managing director and chief executive officer will also be responsible for its breach.

The committee is concerned that premature implementation of competition law, particularly with regard to mergers, could act as a disincentive for necessary mergers. Such a result would harm the potential competitiveness of Indian companies and hurt competition itself.

The committee report says a merger leads to a bad outcome only if it creates a dominant enterprise that subsequently abuses its dominance.

To some extent the issue is analogous to that of agreements among enterprises and also overlaps the issue of dominance. Hence there is no need to have separate law on mergers.

The reason that such a provision exists in most laws is to pre-empt the potential abuse of dominance where it is probable as subsequent unbundling can be both difficult and carry a large social cost.    

New Delhi, June 2 
The fight between the department of telecommunications (DoT) and Telecom Regulatory Authority of India (Trai), has hotted up with DoT reiterating that only three operators should be allowed in national long distance telephony, rejecting Trai member Rakesh Mohan’s demand for unrestricted entry.

“Unlimited entry is likely to fragment the market too much, resulting in creation of economically unviable units. It would result in sub-optimal utilisation of scarce national resources. Such replication and optimal utilisation will unavoidably push up the cost of service,” DoT has said in a letter sent to Trai in reply to Mohan’s note of dissent on the issue.

In its repartee to the regulator, DoT has also taken Mohan to task for contending that the bidding process had resulted in stilting the telecom sector’s growth.

The DoT note said, “We have to ponder how correct it is to blame the bidding process for the difficulties which basic and cellular operators found themselves facing owing to their wrong assessment of the market.”

The telecom department has also rejected Trai’s proposal that the revenue sharing pattern should be about 8 per cent, 5 per cent for USO (universal service obligation) and 1.5 per cent each for meeting the administrative costs of DoT and Trai.

DoT however, wants to have a revenue share of about 20-25 per cent as against the existing 15 per cent (interim).

“The Chinese administration has opted for limited competition in the initial years and it is understood that in China as high as 25 per cent of the revenue earned is being shared by some of the service providers. This is a fair enough pointer that even a comparatively high percentage of revenue sharing, by itself does not hamper the growth of telecommunications,” said the note.

Mohan’s word of caution against making conventional long distance telephone services too expensive, as consumers may shift to internet telephony, too has not found any takers.

DoT said in its reply, “The protection of the long distance operator will lie in large volumes and efficiency gains. In any case, internet telephony in India is still some time away and it is not quite practical to anticipate now the shape of the market as it will emerge after internet telephony is introduced in India commercially and starts offering competition to other service providers.”

DoT sources were confident of winning the round with Trai. “We will have the final say, whatever may be the recommendations from Trai,” they added.

Under the Trai (Amendment) Act 2000, though the regulatory authority may seek information on an issue and DoT would be bound to provide it, the regulator’s recommendations would not be binding on the government.    

Mumbai, June 2 
On a day of mixed fortunes in the markets, the rupee slumped to a new low of 44.62/63 even as the Bombay Stock Exchange (BSE) sensex zoomed 128 points.

The rupee, which has been tottering at the edges and slipping to a new low since last week, was pounded due to massive demand for dollars from corporates. It had tumbled even lower, but the sale of greenbacks in the post-noon by State Bank of India (SBI) helped it recover to 44.62 at the close.

In the forex market, dealers said the Indian currency had touched a low of 44.66/67 early in the day due to a scramble for dollars by corporates. It was at this level that the SBI stepped in to sell dollars, and pushed up the rupee to a level where it lost a little over 5 paise over Thursday’s close.

The rupee opened today at 44.56/58 but slipped to 44.66/67 on dollar-buying enquiries. Market sources said one of the key factors that dragged down the rupee was the demand for greenbacks from a large petrochemical company.

While the currency is only a whisker away from its all time low of 44.75, a level it plumbed last week, forex circles are voicing fears that it might slip below that level next week.

“Unless dollar supplies improve, we might see that level being breached,” a dealer said. Meanwhile, the Reserve Bank of India (RBI) fixed the rupee-dollar reference rate at 44.65, down from Thursday’s level of 44.57 — an indication that there is official recognition of the currency’s depreciation.

The scene was different on stock exchanges, where ICE shares roared to dizzy heights on the back of a staggering 181-point gain recorded in the Nasdaq composite index on Thursday.

Foreign institutional investors (FIIs) were consistent net buyers in a number of ICE scrips like Infosys Technologies, Satyam Computers, Global Telesystems, SSI, Pentamedia Graphics, Zee Telefilms and Wipro.

The 30-share index opened strong at 4381.70 and gradually scaled its intra-day peak of 4486.99 before closing a little lower at 4453.47. Against Thursday’s close of 4325.47 points, it had showed a net gain of 128 points or 2.96 per cent.

Morgan Stanley was the most active in the trading ring today, and is believed to have picked up a sizeable chunk of shares of Tisco. The steel major’s shares were also in good demand from local financial institutions and mutual funds.

Dealers said support for old-economy stocks largely came from institutions.

Meanwhile, the BSE has imposed a 12.5 per cent margin on shares if the sensex falls below 4500, and 15 per cent if its slips below the 4500-5000 level, exchange officials said here today.

Of the 100 gainers in the specified list, Global Telesystems, Pentamedia Graphics, SSI, Glaxo, Tisco and Tata Power were locked in their upper-end 12 per cent circuit filters.

Himachal Futuristic (HFCL) was the top traded scrip again, totting up a turnover of Rs 509.32 crore on a volume of Rs 3258.15 crore. Other top traded shares were Satyam Computer (Rs 425.52 crore), Zee Telefilms (Rs 331.48 crore), Infosys Tech (Rs 290.86 crore) and Global Tele (Rs 202.96 crore).

Market leader HFCL jumped by Rs 53 at 1185, Satyam Computer spurted by Rs 185.90 at Rs 2619 and Zee Telefilms by Rs 44.65 at Rs 547.50. Infosys stole the limelight by zooming Rs 558.20 at 7525.    

New Delhi, June 2 
The Department of Company Affairs (DCA) has tracked down 24 vanishing companies of the 142 which have mopped up large funds from the capital market.

Of the 24 vanishing companies, three are in Gujarat, five in Tamil Nadu, eight in the National Capital Region of Delhi, two in Orissa and six in Madhya Pradesh. Those identified in Orissa are Luminaries and Universal Vita Aliment.

ICP Securities Ltd, Lakshya Securities & Credit Holdings Ltd, Star Electronics Ltd, Star Exim Ltd, Kalyani Finance Ltd, Zed Investments Ltd, BigStat Films Ltd (formerly Moon Holdings & Credit Ltd) and Hatron Networks Ltd are the ones that have been tracked down to Delhi.

In Gujarat, the companies which have come under the microscope are Bhavna Steel Cast Ltd, Topline Shoes Ltd, and Gujarat Bonanza Auto in Gujarat, Global Blooms (India )Ltd., Navakkarai Spinners Ltd, Pappilon Exports Ltd, Shyam Prints and Publishers Ltd, and Amigo Exports Ltd in Tamil Nadu.

Janak Intermediaries Ltd, Rajdhiraj Ind Ltd, Hi-Tech drugs Ltd, Madhyavart Exxoil Ltd, Sterling Kalks and Bricks Ltd and Total Exports are the errant firms in Madhya Pradesh.

The government has decided to delist these 24 vanishing companies. Multi-pronged actions have been initiated against others which have been tracked but are defaulting by not filing their annual returns, and for cheating investors. The action is being taken under the provisions of the Companies Act, the Reserve Bank of India Act and Sebi Act.

The DCA has written to the chief secretaries of states and union territories asking them to launch prosecution, including police action, against companies which have vanished after taking gullible investors for a ride.

The decision to crack the whip against these firms was taken at a meeting between the DCA secretary P. L. Sanjeev Reddy, and Security and Exchange Board of India (Sebi) officials in Mumbai on Thursday.    

Calcutta, June 2 
Ten years after it closed down its retail banking operations in India, BNP Paribas is set to begin its second innings.

The bank will also set up two separate subsidiaries for e-broking and insurance sector as part of its strategic expansion plan in India.

Euroland’s largest bank with a balance sheet size of 960 billion euros has already received approval from the Reserve Bank of India to float a subsidiary which will be a primary dealer in government securities; the services are expected to begin a couple of months. Jerry Rao’s Mphasis and Chlorophyl are two consultants roped in to draw up a branding strategy for its retail push.

Addressing a press conference to mark the inauguration of BNP Paribas’ fully renovated office in the city, chief executive officer and country manager Jonathan Lyon said the bank hopes 20 per cent of its revenues will come from retail operations by the third year of operations when it expects to break even on its investments that run into about Rs 300 crore

BNP Paribas has zeroed in on a unique way of turning itself into the preferred one-stop-shop for the Indian depositor in the overcrowded retail banking market. Lyon said that instead of going through a painfully slow branch expansion, BNP Paribas will offer retail services through boutiques set up across the length and breadth of various cities.

The boutiques will offer various service like ATM, e-broking facility and a connection to the banking centre and other retail products. The retail service will initially be launched in four metros and later in other branches. Currently, it has a network of eight branches and a ninth will be opened soon in Bandra.

The bank is also finalising a strategic alliance to begin e-broking through which it will provide internet based on-line trading at the leading stock exchanges.

It is also finalising its e-commerce strategies and plans to provide B2B and B2C services.

BNP Paribas India has a balance sheet size of over Rs 2000 crore with about Rs 22.5 crore profits last year and is looking at an over 20 per cent growth this year as well. It already has an interactive web site in place where both corporate and private banking clients can transact on the net.

BNP Paribas’s subsidiary, Cardiff Insurance, the third largest French insurer with a dynamic global presence, will be the vehicle for its entry into the Indian life insurance sector .

With a strong presence in India’s leading eight cities throughout the country, BNP Paribas India has also successfully launched private banking recently, providing personalised banking services to high net worth individuals.

The bank launched its private banking recently and manages assets of Rs 600 crore under this portfolio.

Through its sister company, BNP Paribas Peregrine India, it offers investment advisory and brokerage services through its own broking services. The bank has retailed mutual fund instruments of up to Rs 500 crore in the last four months.

A whole range of retail products and services are being finalised to be launched by the end of this calendar year. These include debit card, tele-banking, 24 hour, seven-day banking and a wide gamut of personal loans that will include consumer loans and auto loans. “The retail banking sector presents a tremendous growth opportunity and with our essential focus on customers needs we are confident of being able to provide a unique package for the individual,” Lyon said.    

June 2 
Indian Oil Corporation (IOC) registered a 35.60 per cent increase in turnover and 10.4 per cent increase in net profit in 1999-2000.

The net profit increased at Rs 2,443.40 crore from Rs 2,213.52 crore last fiscal. The gross turnover of the company increased by 35.60 per cent to a whopping Rs 94,263.73 crore during 1999-2000 as against Rs 69,511.63 crore last fiscal.

The board of directors have declared two interim dividends of 35 per cent and 40 per cent for the year 1999-2000 which on consideration of bonus shares effectively stands at 150 per cent, the highest ever declared by the corporation.

IOC’s fixed assets at the end of fiscal 1999 including works in progress went up by 23 per cent to Rs 28.824 crore as compared to Rs 21,646 crore at the end of 1998-99. IOC’s net worth at the end of 1999-2000 was Rs 14,065 crore as compared to Rs 12,269 crore in the previous year.

BOC net plummets

BOC India Ltd, formerly British Oxygen Ltd, has registered a net loss of Rs 79.44 crore during the 18 month financial year ended march 31, 2000.

As the company has changed its financial year from September to March, accordingly the results of the current financial year were not comparable with the previous year’s audited result, though the company had reported a net profit of Rs 6.14 crore as on September 30, 1998. Official sources said after a board meeting today that net sales during this fiscal stood at Rs 397.82 crore against Rs 236.56 crore last year while other income stood at Rs 5.15 crore (Rs 3.59 crore).

Hind Motor loss surges

Hind Motors Ltd, a C. K. Birla group company, has reported a substantially higher net loss of Rs 62.28 crore during the fiscal 1999-2000, against a lower loss of Rs 28.25 crore in the previous fiscal.

Official sources said the loss would have been much higher but for a slightly better fourth quarter performance when net sales increased to Rs 556.16 crore from Rs 468.52 crore and net loss was reduced to Rs 4.75 crore against Rs 17.44 crore in the previous corresponding quarter. Net sales shot up to Rs 1,497.53 crore from Rs 1,218.14 crore last year and gross profit stood marginally higher at Rs 0.89 crore as against Rs 0.87 crore last year.    

Foreign Exchange
US $1	Rs 44.62	HK $1	Rs 5.65*
UK £1	Rs 66.86	SW Fr 1	Rs 26.05*
Euro	Rs 41.77	Sing $1	Rs 25.45*
Yen 100	Rs 41.09	Aus $1	Rs 25.05*
*SBI TC buying rates; others are forex market closing rates


Calcutta		Bombay
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Stock Indices

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