Rupee plummets to 44.95
Bengal leads from the front in strikes
Tatas to merge three power companies
Kesoram Textiles faces closure
Cyber shield for key sectors
Bell Labs skin to cover the planet
IA equity infusion tied to ATR

 
 
RUPEE PLUMMETS TO 44.95 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 8 
The rupee, extending its losses into yet another day, plunged to 44.92/95 against the dollar even as the Reserve Bank of India (RBI) mounted rescue efforts to shore up the beleaguered currency. It gave indications that it could intervene directly if the situation warranted it.

Though the rupee closed at 44.72/74, one of the first things the central bank did after the rupee tested its trough was to ask banks to square off their open positions. Alarmed at the rupee’s descent, banks were warned to comply with the order or else the RBI said it would intervene directly.

Later, in response to queries from banks on open positions, the apex bank clarified that the measure was applicable only for today. Therefore, status quo ante will be restored with effect from tomorrow.

Sensing that the rupee’s freefall had as much to do with high dollar demand as it had to do with speculative forces looking to make a killing from the currency’s travails, the central bank said it was keeping a ‘close watch on banks speculating in the market’.

“We have been watching the inter-bank transactions between 9 am and 10 am this morning. There were few transactions of small value while the price was being moved sharply higher by a handful of banks,” the Reserve Bank said.

“This indicates that the inter-bank activity this morning, in spite of the repeated reminders in the past, seems to be speculative in nature. All genuine market participants would do well to take this into account,” the central bank added.

The rupee started the day by opening around 44.74/76, marginally lower from its overnight record low of 44.73/74, but plunged to 44.92/95. It later recovered to 44.55/60 after the RBI’s statement calmed jangled nerves and reassured market players.

The decline in the rupee to its lowest ever point occurred in the early hours of trading. Shortly after noon, it was quoted at 44.74/76 as hectic dollar demand continued to pile pressure.

The delay in repatriation of dollar proceeds by exporters also added to the currency’s woes, dealers said.

Though there were some indications that the Reserve Bank’s pro-active actions in the forex market had paid off — the rupee staged a smart rebound at the close — dealers were not sure if measures like the one taken today would be effective in the long term.

“Players in the market are not convinced by the rupee’s strength,” a dealer with Mecklai Finance said. This opinion was echoed by several dealers who predicted the currency would lose 3-4 paise in the coming days.

The general view was that the Reserve Bank’s rapid-fire efforts to stem the fall of the rupee had failed, and the continuos slide was evidence that its persuasions and diktats were not working.

Dealers said SBI was seen buying dollars early in the session. Later, after RBI’s stern warning, it withdrew from the scene.    


 
 
BENGAL LEADS FROM THE FRONT IN STRIKES 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, June 8 
West Bengal has emerged with the dubious distinction of being the state with the highest number of strikes. In 1999 alone, the state was crippled by 180 strikes and lock-outs, up from 137 in the previous year.

A study conducted by Associated Chambers of Commerce and Industry (Assocham) on the state of industrial relations pegs losses arising from work disruptions at a whopping Rs 923 crore compared with Rs 694 crore in 1998. At the same time, man-days lost increased to 24.50 million from 22.6 million.

Tamil Nadu, too, is counting the losses inflicted by workers on the warpath. The state, the second most disruptive after Bengal, was wracked by 143 instances of labour trouble in 1999. A year ago, it saw 228 strikes and lock-outs, the highest for the year.

According to the study, even the reform-minded Andhra Pradesh was dogged by labour strife. In all, 113 cases of strikes and lockouts were recorded in 1999, giving it the third slot in the league. Gujarat, at number four, saw 132 strikes in 1998 and 102 in a year later.

Among the northern states, Uttar Pradesh saw fewer strikes and lockouts at 30 in 1999 compared with 50 in 1998. In Rajasthan too, the number declined from 33 in 1998 to 28 in 1999, as it did in Punjab, where the number of strikes fell from 22 to 11. Madhya Pradesh also reported only 13 cases, down from 26 in 1998. In Haryana, the number of disruptions declined from 50 to 24.    


 
 
TATAS TO MERGE THREE POWER COMPANIES 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 8 
In a move to consolidate its electric power generation and supply ventures, the Tatas today announced plans to merge the three Tata Electric Companies — Tata Power Company Ltd, Andhra Valley Power Supply Company Ltd, and Tata Hydro-Electric Power Supply Company. The merger will create a power behemoth with sales of Rs 2277 crore and net profits of Rs 339.3 crore.

In a late evening press communique, the Tatas said the board of directors of the three companies will meet on June 14 to discuss the merger proposal. A proposal to “raise additional capital in an appropriate form” will also be discussed, the statement said.

Apart from the two important proposals, the agenda for the meeting will include the consideration of the audited results and the final dividend, if any, for the year ended March 31,2000.

The merger news comes against the background of a suspected counter-bid against the Reliance offer to be unleashed by the Tatas for BSES, for which the deadline expires tomorrow. However, the news of the merger came as no surprise to the analysts tracking the three companies. This is because the flagship company in electricity generation — Tata Power — has been steadily increasing its stake in Andhra Valley and Tata-Hydro.

Last August, The Telegraph had reported the consolidation exercise. in fiscal 1999, Tata Power Company had increased its holding in two of its associates — Tata Hydro-Electric Power Supply Company Ltd and Andhra Valley Power Supply Company Ltd — by 5.38 and 2.20 per cent respectively.

Using the creeping acquisition route, Tata Power raised its stake in Tata Hydro-Electric and Andhra Valley to 10.66 per cent and 15.24 per cent respectively.

During the year 1998-99, Tata Power purchased 23,65,200 shares of Tata Hydro-Electric Power Supply Co. Ltd, thereby increasing its holding to 46.89 lakh shares. It also raised its stake in Andhra Valley Power Supply by acquiring 14,58,450 shares during the year under review, thereby increasing its overall holding in that company to a little more than 1 crore shares.    


 
 
KESORAM TEXTILES FACES CLOSURE 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, June 8 
Kesoram Textile Mills Ltd, a B.K. Birla group company, is heading for permanent closure with its networth being eroded by around 40 per cent in the very first year of operation.

A closure will throw 3000 workers out of their jobs.

A senior company official said the company had suggested a number of proposals both to the West Bengal government and the trade unions to run its only manufacturing unit at Kidderpore in Calcutta.

“But neither the government nor the trade unions has agreed to our proposals confounding the situation at the mills,” he said.

The proposals include closing down of operations at the loom shed and its allied departments which employs 1500 workers, imposing a wage freeze, and reducing manpower and productivity linked wage system. The company has also proposed to farm out some jobs to contractors.

The company wants to only run the spinning unit. The official said the company was not in a position to offer the voluntary retirement scheme (VRS) to get rid of the surplus workers.

“We will, however clear all statutory dues of the employees,” he said.

KTML was born after the loss-making textile division of Kesoram Industries was hived off as a part of the company’s restructuring programme recommended by the Ernst & Young.

Work has been suspended at the Kidderpore unit since January 1999.

The official said the company’s capital base, which stood at Rs 10.45 crore, would go down to around Rs 6 crore when the financial results were approved. The company is going to finalise its accounts next week.

The official said the trade unions did not even allow the company to send maintenance workers into the factory so that the machinery did not get affected due to the suspension of work.

“Our factory is situated on the banks of Ganga and therefore faces a major problem of rust formation. We had even agreed to the unions’ proposal of taking maintenance staff from their panels.    


 
 
CYBER SHIELD FOR KEY SECTORS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, June 8 
Union minister for information technology Pramod Mahajan will approach the Prime Minister’s Office (PMO) with an action plan to guard critical sectors like banking, petroleum and natural gas, from cyber attacks.

Taking a cue from the FBI, the ministry of information technology is planning to set up a high level group, comprising experts from various fields to safeguard critical infrastructure.

Mahajan said the definition of critical infrastructure would have to be broadened to include banking, telecom, power, transport, water supply, energy services, petroleum and natural gas and government operations.

So far critical infrastructure included ordnance factories, atomic centres, railway stations, airports and oil stations among others.

Mahajan told reporters today that the security of critical infrastructure is important because of the high levels of computerisation. “Now it has become more important to protect our computer systems as any attack on them could cause great damage. For example, if the banking system is hit, the entire economy would be in chaos,” said Mahajan.

He added, “I will ask the PM to set up a group comprising people from all areas who would be able to handle such attacks.”

The idea for such a group has been borrowed from the National Infrastructure Protection Centre set up in the US by the FBI.

Mahajan has also set a deadline of August 15, by when the Information Technology Act should come into force. “From August 15, the implementation of the law should be possible,” he added.

To ensure quick implementation of the Bill, he said a five member panel under P. V. Jayakrishnan, secretary, ministry of IT, is being appointed.    


 
 
BELL LABS SKIN TO COVER THE PLANET 
 
 
FROM M. RAJENDRAN
 
New Delhi, June 8 
US-based Bell Labs is building the first layer of a mega network that will cover the entire planet like a skin. “This skin, fed by a constant stream of information will grow larger and more useful,” says Arun Netravalli, president of Bell Labs.

It means, gadgets, like the refrigerator, washing machine, oven in India will be able to inform the dealer/manufacturers in the US about the malfunctioning on their own and the manufacturers will be able to diagnose the problem from there.

The project skin will consist of millions of electronic measuring devices — thermostats, pressure gauges, pollution detectors, cameras, microphones — monitoring cities, roadways and the environment.

The sensors and other devices will transmit data directly into the mega-network, just as the human skin transmits a constant stream of sensory data to the brain.

According to, Netravalli, by the year 2025 the entire world will be encased in a communications skin.

“A mega-network of networks will unfold the earth in a communications skin with ubiquitous connectivity and enormous bandwidth,” he said.

Netravalli is in India to interact with the policy makers, to discuss the new technologies and the impact it will have on India.    


 
 
IA EQUITY INFUSION TIED TO ATR 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, June 8 
The civil aviation ministry plans to go ahead with a cabinet decision to inject equity worth Rs 325 crore into Indian Airlines to help it buy new planes, including the controversial 52-seater ATR aircraft.

It also wants to help Air India, the state-owned international carrier, expand its fleet either through purchases or dry leases of aircraft even before the process of divestment begins, newly-appointed civil aviation secreteray A.H.Jung said.

A plan to rationalise manpower, cut down inventories and costs in the loss-making Air India is also being worked out. “But I don’t think we can go in for the Rs 1000 crore bailout that the airline has asked for. We can’t give money away just like that without a proper cost-benefit analysis,” Jung said.

The government also plans to bring in a regulatory mechanism for the entire aviation sector before it goes ahead with privatisation of the two airlines and leasing out of major airports, the secretary indicated. “The draft policy on this is ready and should go to the cabinet soon,” he said.

Air India is currently planing to sell off seven old jets and replace them with six leased A310s and two B747-400s. It earlier also wanted to buy about new 20 planes as part of a fleet expansion drive, a plan which it later pruned to just six. But till now no final decision has been taken on the expansion plan. Jung’s comments seem to indicate that the airline is likely to get the approval to go ahead with this.

The airline which currently has a fleet of 26 ageing planes made a loss of Rs 75 crore in the last fiscal and Rs 174 crore in 1998-99. Profitable till 1994-95, it has been steadily turning sick as increased competition has seen its share of air traffic out of India falling even as it remains unable to attract high yielding first and business class passengers.

The move to inject Rs 325 crore into the domestic national carrier — Indian Airlines — however is likely to remain linked to the purchase of ATR aircraft, something which the Indian Airlines has been fighting shy of. Jung, however, added “IA’s views on the issue will certainly be taken into account before a final decision is taken.”

IA has recently shot off a note pointing out that despite a cabinet decision to sell air turbine fuel for ATR aircraft at a concessional rate, it would be still uneconomic for IA to fly these planes.

The BJP government has been pushing the domestic carrier to buy the 52-seater French-made turboprop aircraft for a long time. Earlier this year, in an apparent move to persuade Indian Airlines into doing just this, it took a cabinet decision to price aviation turbine fuel for turbo prop aircraft at 40 per cent lower than the normal rate.

Nevertheless, the airline remained steadfast against the deal, protesting flying the ATRs would be a losing proposition. Two IA chiefs — Anil Baijal and P.C Sen — have exited after opposing the ATR purchase. While Baijal was politely told last month that his tenure as CEO could not be extended and he would have to leave by this month end, the airline’s previous managing director Sen had been sacked by former civil aviation minister Ananth Kumar through a diktat delivered late at night.

Instead, the domestic airline has been pushing to replace its its ageing fleet of 11 Airbus 300s and 12 Boeing 737-200s, with more 23 modern versions of Airbuses and Boeings bought over a timespan of five years.    

 

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