Rupee hits new low at 45.38
Bharti unveils three-way spinoff
Sun Info snaps up Zap for Rs 475 cr
ICICI Bank leads lending rate hike
Fresh FI rider for Haldia Petro
Cabinet set to clear changes in company law
Stiff entryfee normsfor private NLD players
Philips ombudsman for better service
Foreign Exchange, Bullion, Stock Indices

 
 
RUPEE HITS NEW LOW AT 45.38 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug 2: 
The rupee was tumbled to 45.38 today as the streak of losses continued into the third day this week, but dollar sales by exporters helped it recover and close at 45.31/33 — yet another historic low for the bruised currency.

Today’s fall occurred as the Reserve Bank of India (RBI) did nothing to indicate that it would come to the rupee’s rescue. Although it did sell a moderate amount of dollars through the State Bank of India (SBI) early in the session, it remained a silent spectator to the slide for the best part of trading.

However, many dealers saw a silver lining in today’s 15-paise freefall: the fact that exporters are bringing in their dollars stashed away abroad. Many in the market feel that if this happens on Thursday, as it did today, the rupee might perk up.

From the trough it hit today, some analysts say the currency could even appreciate by 5-10 paise. “It now seems that the huge demand for dollars seen in the past few days is easing. There is a chance the rupee may regain lost ground as exporters sell dollars. In addition, foreign institutional investors (FIIs) may return to the stock markets,” said a senior dealer with e-Mecklai, a city-based forex brokerage.

Others in the market were more sceptical. They say the rupee’s gains will depend on whether inflows from FIIs are forthcoming, and expect the currency to remain range-bound between 45.25-35. It could even tumble to the crucial 45.50-mark if companies rush for dollars the way they did on Monday.

“The RBI has, so far, adopted a wait-and-watch policy as there is an inherent demand for dollars in the market. We could see the central bank intervene actively if the rupee touches the 45.50 mark,” said Rohan Lazrado, senior manager with HDFC Bank.

The rupee opened slightly weaker at 45.15/20. However, the sale of dollars by the central bank through SBI held the currency at 45.25 for some time. However, it hit the skids later, largely due to inter-bank speculation. Corporate demand for dollars, though strong, was not seen as the main reason for the fall.

“There was not much corporate demand. The rupee’s decline was caused by speculative factors as banks went long on dollars and booked profit at higher levels,” an analyst said. This led the Indian currency quickly losing its value and hitting the intra-day low of 45.38.

Unconfirmed reports say there were quotes available even at 45.40 to a dollar.

It was at this point that exporters came out to offload their dollar holdings. Even as supplies of the greenbacks increased, the FIIs were conspicuous by their absence.

The sale of greenbacks, coming at the fag end of the session, helped the currency stabilise at 45.30/35, before it closed at 45.31/33.    


 
 
BHARTI UNVEILS THREE-WAY SPINOFF 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug 2: 
Bharti Enterprises today broke up its manufacturing and service operations into three companies as part of a revamp drive to keep pace with the changes that have occurred in technology and management. These firms spawned by the demerger will be listed on stock exchanges.

“The restructuring aims to create functional and operational specialisation with a linear vision of business-lines and functional areas. The company has introduced the concept of total operational freedom with corporate control,” Bharti group chairman and managing director Sunil Bharti Mittal said here today.

Bharti Telecom, which holds 96 per cent in Bharti Enterprises, will provide the entire range of services such as fixed-line telephones, mobile links, network and internet access while manufacturing activities will be transferred to Bharti Teletech.

Bharti Telecom controls the group’s stake in operating companies through its subsidiaries, Bharti Televentures and Bharti Telespatial.

As part of the restructuring exercise, the group has set up a team of corporate directors to oversee the transition. They will monitor eight areas, including projects and capacity expansion, human resources, marketing, corporate communications, technology, finance, legal and corporate affairs.

The service functions will be slotted under three categories: mobility (for cellular projects), basic services (for fixed & fixed wireless services) and networks (broadband services, domestic long distance, V-Sat and infrastructure development). A president will head each business, and all CEOs of service companies will be required to report to him.

A business review and investment committee (BRIC) will give the companies an overall direction. It will comprise the chairman and group managing director, vice-chairman and managing director, managing director, two joint managing directors and several key corporate directors.

The company will offer investors three shares of Bharti Teletech for 10 shares of Bharti Telecom as part of the demerger. Once the revamp is completed, Bharti Teletech will consolidate its telecom terminal operations through an operating unit while the telecom ducts business will continue to be vested with Bharti Duraline. Bharti Teletech will hold a 50 per cent stake in the company with the US-based Duraline.

Three new divisions have been launched under Network Services. These will focus on broadband services, domestic long distance services and infrastructure development. Bharti-BT Ltd, the V-Sat service provider, will be a part of it.

The third company, Bharti Global, will focus on its international operations. It will control the global activities of Telecom Seychelles, and Bharti Telesoft, its software subsidiary.

Bharti Telesoft, the group’s software division, focuses on technology and product development in telecom and e-commerce while Telecom Seychelles offers an array of services in Seychelles.

“Separate entities were required to manage recent acquisitions in Karnataka, and Andhra Pradesh, the opening up of domestic long distance services, apart from launching new initiatives in broadband services and infrastructure,” Mittal said.

Mittal will continue as the chairman and group managing director of Bharti Enterprises. This would makes him the ex-officio chief of Bharti Telecom and Bharti Teletech. After the restructuring process, he will hold an additional post, that of the managing director of Bharti Telecom.

The new structure also defines the role of CEOs who will have total control in managing their respective companies. At the same time, they will be fully responsible for build world-class organisations with a high degree of customer focus.    


 
 
SUN INFO SNAPS UP ZAP FOR RS 475 CR 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug 2: 
Sun Infoways Ltd, the Mumbai-based wireless technology company, today announced that it has sewn up an all-stock deal to acquire software development firm Zap Infotech for Rs 475 crore.

“The acquisition will involve transfer/alignment of Zap’s business to Sun Infoways’. Omesh Gowda, the company’s director for strategic initiatives, told reporters here today.

Sun Infoways has significant interest in wireless application protocol (WAP), while ZAP Infotech is an integrated software service provider with major focus on wireless technology.

The deal is subject to the approval of Sun Infoways’ board that is slated to meet on August 16.

Sun Infoways, which is quoted on the Bombay Stock Exchange (BSE), closed today at a high of Rs 546.10. The scrip had been having a good stint on the bourses for the past few days. Its 52-week low was Rs 8.

After the acquisition, the capital base of Sun Infoways would go up from Rs 5 crore to Rs 8 crore, Gowda said.

The money will be paid in the form of equity shares and/or warrants convertible into equity shares under preferential allotment of shares within the guidelines of the Securities and Exchange Board of India (Sebi).

It is also likely that promoters of Zap Infotech will be issued convertible preference shares.

However, the premium on the shares to be allotted is yet to be decided and will be decided by the board, Gowda added.

The deal will alter the existing shareholding pattern of Sun, resulting in promoters’ holding coming down to 33.75 per cent from the earlier 54 per cent. Zap Infotech as a strategic partner will hold 31.25 per cent, while the public holding will be 28.75 per cent (earlier 46 per cent) and US based strategic investors 6.25 per cent.

The combined entity is likely to achieve a turnover of Rs 225-250 crore and a profit after tax of Rs 55-60 crore on a likely capital base of Rs 8 crore, resulting in an earnings per share of Rs 75. The merged company will have a net worth of Rs 530 crore.

Gowda said the move would bring in synergy and consolidate its front-end lineage such as mobile commerce, voice over internet protocol (VOIP) and back-end integration of the state-of-the-art research and development, facilitating telecom solutions leading to convergence.    


 
 
ICICI BANK LEADS LENDING RATE HIKE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug 2: 
ICICI Bank today raised its key lending rates by 50 to 75 basis points, the first bank to do so after last month’s increase in the Bank Rate and cash reserve ratio.

With the asset-liability committee of the State Bank of India (SBI) likely to clear at least a 50 basis points increase in lending rates tomorrow, sources say other state-owned banks, and those in the private sector, will also jack up their rates.

ICICI Bank will charge 11.5 per cent on loans for less than 90 days, up from 11 per cent earlier. Loans between 91 days to 364 days will now be serviced at the rate of 12.50 per cent compared with 11.75 per cent. Rates on loans for 365 days and above have been revised to 14 per cent from 13.5 per cent. There was no change in the deposit rates.

Mohan N Shenoi, senior vice-president (retail banking), ICICI Bank, said the revision was done on the basis of the bank’s asset-liability requirements.

“We were looking at the interest rates on deposits and advances from the point of our asset-liability mix and the spreads. We also examined the markets and then decided to raise the rates,” he stated.

Even as banks appeared ready to charge more from their borrowers, financial institutions decided not to tinker with their rates.

Banking circles, however, say a high-rate regime is on the cards not only because of the measures taken by the RBI last month, but also due to the higher rates in the international markets.

“Interest rates in the US have shot up. The same will happen in the domestic markets, given the fact that a huge part of government’s borrowing programme has yet to be completed. In addition, the current state of the forex and equity markets gives us the feeling that interest rates in the country have now bottomed out,” a senior banker said.

On July 21, the Reserve Bank decided to rescue a faltering rupee by raising the Bank Rate by 1 percentage point to 8 per cent and increasing the CRR by 50 basis points to 8.5 per cent.    


 
 
FRESH FI RIDER FOR HALDIA PETRO 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Aug 2: 
The financial institutions have asked Haldia Petrochemicals to tap the capital market for the required equity to bridge the gap in its capital base. The proposal has been made as a precondition to sanction further loans to the company which is in dire need of funds to run operations.

Top company sources said the Industrial Development Bank of India (IDBI), leader of the consortium of the FIs, had submitted its proposals to the HPL board today on the ticklish issue of bringing in additional equity.

“IDBI has proposed the conversion of some loans, given by the promoters to the company, into equity. It has urged the company to prepare for a public issue before the end of December to retire bridge loans worth Rs 300 crore,” they added.

The promoters had rendered Rs 100 crore loans to the company last year in addition to the equity.

The Rs 5,100 crore HPL project has an equity component of Rs 1,979 crore, of which Rs 1,010 crore has been injected by the three promoters — the West Bengal Industrial Development Corporation, The Chatterjee Group and the Tatas.

While WBIDC and TCG have invested Rs 433 crore each, the Tatas have given Rs 144 crore.

The gap in the equity was to be filled up through a public issue. However, the company refrained from floating raising a public issue in view of the depressed market conditions.

TCG was given mandate to look for a fourth partner for the project, but it failed to find one.

The circumstances thus forced the company to seek bridge loans worth Rs 300 crore from the FIs and banks, while it mopped up Rs 269 crore through optionally convertible debentures.

The company has managed to get a deferred suppliers payment worth Rs 300 crore besides a liability of Rs 100 crore on the interest account.

Sources close to the development said the IDBI wants the company to retire the bridge loan liability by bringing in additional equity within the next few months.

They revealed that the company could manage to retire its bridge loans if the Indian Oil, which made a commitment to pick up a stake in HPL, had made the investment. “The state finance minister had announced that the IOC would invest over Rs 140 crore in the first phase which would be extended further to Rs 400 crore in future. But till date, IOC has not made any investment,” a senior HPL official said.

TCG chief Purnendu Chatterjee, who was present at today’s board meeting, has reportedly met the state government in order to arrive at a solution to the problem. “The market for polymers and chemicals have been depressed due to the dip in Chinese demand. If the export market does not look up, it would be difficult to sustain only on domestic demand,” says the official.

HPL has exported around 2,500 tonnes of polymers in eight south and east Asian countries. The domestic sales stood at 26,000 tonnes during the last two months. The company has also sold 15,000 tonnes of chemicals which include benzene and carbon feedstock.

Meanwhile, Richard B Saldanha took over as the managing director of HPL today. Prior to this, he served the Unilever group as president and CEO of Unilever, Peru and a member of the Unilever Latin American board.    


 
 
CABINET SET TO CLEAR CHANGES IN COMPANY LAW 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, Aug 2: 
The Cabinet is likely to clear a fresh bunch of amendments to the Companies Act tomorrow.

The amendments allow internet voting by shareholders, calls on companies to compulsorily deposit dividends in a separate account within five days of declaration, redefines small shareholders and forces companies defaulting on payments to depositors to report monthly compliance to the Company Law Board.

These amendments, which have been vetted by various government departments, have been cleared by the finance ministry. These were originally mentioned in a report submitted by the standing committee on home affairs.

The new set of amendments allow voting through “electronic media along with postal ballot” in special cases.

Officials said this implies that shareholders would be able to vote through the internet on all special resolutions.

“This will be an innovation but security measures have to be formulated against fraudulent voting,” they added.

Corporates will also have to place dividend amounts in a separate inviolate account within five days of declaration of the dividend.

This has been done as many corporates tend to pay dividends months, if not years, after declaration of dividends.

“There have been cases of companies delaying payment of dividend as the money involved was being used for a host of other purposes,” officials said.

The term — small shareholder — has been redefined to mean an individual who owns stock with a market worth of up to Rs 20,000 as on the day of the election of a company’s board of directors. The definition is being inserted in order to implement the clause which provides that each company should have one director representing 1,000 small shareholders.

After these amendments are passed, many companies will have to expand their boards considerably.

The amendments also provide that companies defaulting on pay-outs to depositors will have to make monthly statements to the Company Law Board on the status of their pay-outs.

This follows numerous cases where even well known companies have had to be dragged before the courts by small depositors to get back money owed to them.

Company boards will also have to report to the shareholders in case they do not accept any recommendation made by the company’s audit committee along with the reasons for it.

This has been done to make management practices more transparent, officials said. With the same objective, the amendments will also ask companies to print the company secretary’s report along with the director’s report.    


 
 
STIFF ENTRYFEE NORMSFOR PRIVATE NLD PLAYERS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug 2: 
The Union finance ministry has asked the Telecom Commission to set stiff entry fees so that only serious players are allowed to provide national long distance services. The Cabinet is likely to clear a fresh bunch of amendments to the Companies Act tomorrow.

The amendments allow internet voting by shareholders, calls on companies to compulsorily deposit dividends in a separate account within five days of declaration, redefines small shareholders and forces companies defaulting on payments to depositors to report monthly compliance to the Company Law Board.

These amendments, which have been vetted by various government departments, have been cleared by the finance ministry. These were originally mentioned in a report submitted by the standing committee on home affairs.

The new set of amendments allow voting through “electronic media along with postal ballot” in special cases.

Officials said this implies that shareholders would be able to vote through the internet on all special resolutions.

“This will be an innovation but security measures have to be formulated against fraudulent voting,” they added.

Corporates will also have to place dividend amounts in a separate inviolate account within five days of declaration of the dividend.

This has been done as many corporates tend to pay dividends months, if not years, after declaration of dividends.

“There have been cases of companies delaying payment of dividend as the money involved was being used for a host of other purposes,” officials said.

The term — small shareholder — has been redefined to mean an individual who owns stock with a market worth of up to Rs 20,000 as on the day of the election of a company’s board of directors. The definition is being inserted in order to implement the clause which provides that each company should have one director representing 1,000 small shareholders.

After these amendments are passed, many companies will have to expand their boards considerably.

The amendments also provide that companies defaulting on pay-outs to depositors will have to make monthly statements to the Company Law Board on the status of their pay-outs.

This follows numerous cases where even well known companies have had to be dragged before the courts by small depositors to get back money owed to them.

Company boards will also have to report to the shareholders in case they do not accept any recommendation made by the company’s audit committee along with the reasons for it.

This has been done to make management practices more transparent, officials said. With the same objective, the amendments will also ask companies to print the company secretary’s report along with the director’s report.The commission, which took up the issue for discussion today, has finalised the entry norms for private national long distance operators. These are likely to be announced on August 15. Sources in commission said, “The talks progressed well and the details have been sent to the Union communications minister for final approval.” Telecom Commission chairman Shyamal Ghosh refused to give details about the new rules. “We have set competitive entry conditions for private operators. The matter has to be finalised by the minister. There is no need to go to the Cabinet in this connection.” Sources in the commission said, the members unanimously agreed that the norms should be made strict to weed out the players who are not serious. “We have decided to more or less accept the suggestion made by ICICI regarding net worth of the company. The rollout obligations have been made more strict,” revealed the sources.    


 
 
PHILIPS OMBUDSMAN FOR BETTER SERVICE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug 2: 
Electronics goods major, Philips India, today unveiled initiatives aimed at better after-sales service. It is the first company in the consumer electronics segment to introduce the concept of corporate ombudsman. Philips also launched a new customer service logo.

Corporate ombudsman will sort out customer’s problems. The company has appointed K S Raman, former president of Colour TV Manufacturers’ Association, as the ombudsman.

“Philips India has taken a lead in introducing this concept. Hopefully, this will be followed by the company internationally too,” said Rajeev Karwal, senior vice president, Philips India.

“The complaints will be auto-escalated. If the complaints are not attended within a couple of days, it will reach the ombudsman in a week’s time,” said Karwal.

Following this, Onida, Videocon and Baron expressed interest in appointing an ombudsman, informed Raman. According to him, ombudsman should be appointed across the industry to redress customer grievances.

Meanwhile, Philips also unveiled a new customer service logo with the motto ‘Care beyond compare’.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs.45.33	HK $1	Rs. 5.70*
UK £1	Rs.67.49	SW Fr 1	Rs. 26.45*
Euro	Rs. 41.53	Sing $1	Rs. 25.75*
Yen 100	Rs. 41.54	Aus $1	Rs. 26.00*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta	Bombay

Gold Std (10gm)	Rs. 4515	Gold Std (10 gm	4490
Gold 22 carat	Rs. 4265	Gold 22 carat	4155
Silver bar (Kg)	Rs.7950	Silver (Kg)	8010
Silver portion	Rs. 8050	Silver portion	8015

Stock Indices

Sensex	4260.88	+7.19
BSE-100	2139.44	+4.06
S&P CNX Nifty1331.90	+5.05
Calcutta	121.88	+0.77
Skindia GDR725.37	-19.17	
   
 

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