VSNL raises bonus issue ratio to 2:1
FIIs reverse trend, turn net buyers in Aug
Indian Hotels to check in at New York, Dubai
Bankers hope measures to recover NPAs will bear fr
New-look selloff panel soon
Paswan pledge to phone staff
Foreign Exchange, Bullion, Stock Indices

Mumbai, Aug 25: 
Videsh Sanchar Nigam Ltd (VSNL) today increased the ratio of its bonus issue to two new shares for every one held (2:1) as against the earlier ratio of 1:1. It also unveiled plans to increase its internet bandwidth from 331 mbps (million bits per second) to 775 mbps.

VSNL said the decision to revise the ratio of the bonus issue was taken in order to fulfil the criteria of attaining a paid-up capital of Rs 250 crore and become eligible for a licence to enter the domestic long distance services (DLD) sector which has just been thrown open.

Chairman and managing director S K Gupta said the opening of the DLD segment would create a new revenue stream for the company.

It may be recalled that at its meeting on July 27, the board of directors had recommended the issue of bonus shares in the ratio of 1:1 which would have raised the paid-up capital to Rs 190 crore. At today’s meeting, the board also approved a resolution to raise the company’s authorised share capital to Rs 300 crore from Rs 100 crore at present which will be placed before shareholders for their approval.

The additional bandwidth of 465 mbps will be available within the next two months, long before its scheduled date of December 2000, the company said.

The telecommunications giant also said 2mbps of bandwidth will be provided on demand after October after the commissioning of the three STM-1 (totalling 465 Mbps) from India to the US. The bandwidth which is now approved by the board, is expected to clear all the pending requirements for internet bandwidth.

On the Bombay Stock exchange, the VSNL scrip surged to Rs 831.30 after opening at Rs 777.90 and hitting an intra-day high of Rs 845 as marketmen reacted positively to the announcements.

Last October, Gupta had announced that while its monopoly in international telephony would be reviewed in 2004, the company was considering ways of entering the domestic long distance telephony segment after it was thrown open to competition.

VSNL, which is one of the public sector navratnas, has the monopoly on international telephony which accounts for over 80 per cent of its revenues.

The company has also identified internet telephony as one of its focus areas.

It had initially planned to invest around $ 1 billion in international alliances and local infrastructure over the next five years to maintain its supremacy in international call traffic in India after its monopoly ends in 2004. Investments in satellites, undersea cables and switching are some of the modes which have been identified by the company to maintain its premier position in international telephony.

Recently, the company’s American Depository Receipts (ADR) was listed on the NYSE. In 1997, the company had completed its GDR programme with 37.80 million GDRs. Subsequently, in 1999, the company issued a second tranche of 20 million GDRs.    

Mumbai, Aug 25: 
For the average Indian investor who has witnessed the fruits of his investments shrink consistently thanks to value erosion in the stock markets, here comes the good news.

After two months of negative investments by foreign institutional investors (FIIs) to the tune of $ 535 million, August has seen the lot bringing an inflow of $ 351 million.

Figures released by the Securities and Exchange Board of India (Sebi) reveal that so far in the month of August, FIIs have made gross purchases of over Rs 4,400 crore into the equities markets against gross sales of Rs 2857 crore. This translates into a net investment of Rs 1572 crore. These figures mark a smart turnaround from a negative investment of Rs 1,418 crore in the month of July and Rs 959 crore in the month of June.

Broking circles now aver that if the FII buying spree were to sustain in the near future, the markets are well poised to look up.

“Due to the positive FII inflows, we are now looking at a different bottom. Against the level of 3850 earlier, the new bottom is now perceived to be at 4200 levels. If the buying were to continue, then the markets may stabilise at the present levels and actually spurt,” said Nikhil Vora, portfolio manager at sharekhan.com

Sources added that while the recent FII buying may induce mutual funds and other institutions to turn buyers on the bourses, a majority of the purchases by the foreign investors have been in the top-rung stocks, chiefly comprising the new economy ones.

“If we look at the FII investments made recently, it can be said that the broader trend for the markets to go up would largely come from the technology stocks,” an equity analyst with a local brokerage pointed out.

Some of the technology stocks which have caught the FIIs’ fancy recently include Infosys Technologies, Satyam Computer, DSQ Software and Silverline among others. In the old economy sectors, the list includes Dr Reddy’s Laboratories, Hindustan Lever and others.

The FIIs that are believed to be quite active on the bourses as of late are believed to be Morgan Stanley, Capital International and a fund promoted by the government of Singapore.

While most of the FII buying is said to have come at lower levels in several scrips, market circles opine that though the underlying sentiment is ‘somewhat bullish,’ there are other concerns as well. Primary among them is the possibility of a hike in crude oil prices consequent to international prices surpassing the crucial $ 30 per barrel mark.

“There are other concerns too such as escalation of violence in Kashmir,” a broker remarked.    

Mumbai, Aug 25: 
Indian Hotels Company Limited (IHC) is close to signing deals to manage two hotels in New York and Dubai.

Stating this at the annual general meeting of IHC, company chairman Ratan Tata said, “We are looking at a hotel in New York and in Dubai, which are in keeping with the image of the Taj group of hotels.”

One may recall that the Tatas had recently exited from a hotel venture in New York, which was in the lower-end of the market. It was felt then that the property did not jell with the other Taj properties.

The highlight of the 99th annual general meeting of the hotel group was the introduction of K B Dadiseth, director of the FMCG major Unilever Plc as one of the two new appointees of the company, the other being Deepak Parekh, chairman of housing finance major HDFC Ltd.

Ratan Tata admitted that the group, in a bid to expand, had even looked at properties in south-east Asia last year, in order to take advantage of the prevailing crisis.

“Unfortunately, we were not able to find any bargains. We saw a lot of properties but no bargains,” said Tata. On the IHC group’s investment in the government run ITDC, he explained that it was done with a view to fortify itself, as at that time a foreign hotel major was eyeing the state-owned chain of hotels.

He hoped that the group’s Rs 65 crore investment would pay-off in the long run and argued that the properties continue to have strategic importance in the Indian hotel industry.

Talking about the massive renovation exercise being undertaken in the hotel chain, Tata said the company will incur a cost of Rs 18 crore for renovating its Mumbai properties and on an all- India basis, the cost involved would be in the region of Rs 38 crore.    

New Delhi, Aug 25: 
The Indian Banks Association (IBA) today expressed hope that the recent measures announced by the Reserve Bank of India (RBI) would help in considerably reducing non performing assets of public sector banks.

According to IBA chairman S.S. Kohli, the steps will help in improving the profitability of banks by about 100 per cent.

At present, the total NPAs of PSU banks is more than Rs 55,000 crore.

The revised guidelines of RBI said the minimum amount that should be recovered under the compromise settlement of doubtful or loss assets as on March 31, 1997 would be 100 per cent of the outstanding balance. Also promoters would have to try to pay the money in one lot.

During an interaction with the members of the PHD chamber of commerce, Kohli said the industry should also help banks in improving recovery. “Chambers can help by asking their members to clear dues,” said Kohli.

He said that to curb NPAs, the recovering officers must be given more powers. The number of officers should also be increased.

However, the reduction in loan applications this year has proved to be a worrying factor for banks. In 1999-2000 there had been a 21.4 per cent growth in credit, an increase from the previous year’s 14.39 per cent. “Banks have so far received fewer applications while they are keen to lend,” said Kohli.

Ranjana Kumar, chairman and managing director of Indian Bank said that banks should be extremely careful while giving loans in future. “Banks should not only read the balance sheet but also know the people behind the balance sheets. It is important to know your customers well,” she said.    

Calcutta, Aug 25: 
The new disinvestment commission is to be set up very soon under the disinvestment ministry.

Jagdish Shettigar, convenor of the economic affairs committee of the BJP, who was in the city today to address a seminar on ‘The politics of economic growth: Options for India’ organised by the Indian chamber of commerce, said that the commission will be announced either before the Prime Minister’s departure to the US early next month or after his return.

The chairman of the committee consisting of three to four permanent members would be appointed shortly.

Shettigar emphasised that in the present scenario of mass illiteracy and poverty, there is an immediate need to do away with the ‘farce of subsidies and public sector enterprises’ and siphon the released resources for social and infrastructural development if India is to come at par with the other developed nations.

“The public distribution system designed for the poorest of the poor has never percolated to the bottom and has been misused by the privileged class to meet their own requirements,” said Shettigar.

He also showed great concern over the fact that the country’s fiscal deficit is almost half of the total revenue and is continuously on the rise. He added that there is an utmost necessity to emphasise on subsidy cut and privatisation of the public sector units which are imposing a burden on the exchequer by incurring huge losses.

However, Biplab Dasgupta, MP of CPI(M), also present on the occasion, differed in his opinion regarding India’s tortoise paced growth.

Dasgupta laid the importance on change in managerial practices in the public sector enterprises rather than complete sell out of these units. “Disinvestment of all the public sector units is no panacea,” said Dasgupta. According to him, the lopsided growth of India, as compared to the east-Asian countries, is attributed to the low savings-GDP ratio which is about 22 per cent as compared to 50 per cent in Singapore.    

New Delhi, Aug 25: 
Waving the white flag as a two-day telecom strike crippled telecom operations in parts of the country, communications minister Ram Vilas Paswan today appealed to the striking employees to call off their strike and allayed apprehensions regarding the corporatisation of the Department of Telecom Services (DTS) and the Department of Telecom Operations (DTO).

Paswan said that matters relating to employees’ pay and pension and their rights will be fully protected. He reiterated that there was no question of any dilution of their rights even after corporatisation. He added that the government will ensure that all adequate steps are taken to facilitate smooth transition from a departmental organisation to a corporate entity.

In an official release in response to the indefinite strike called by the National Federation of Telecom Employees, Federation of the National Telecom Organisation and Bharatiya Telecom Employees’ Federation from September 6, Paswan reiterated, “The government will take all possible steps to protect the financial viability of the corporatised DTO particularly in the context of operations deemed unviable.”

One of the main concerns expressed by the unions was regarding the financial viability of the proposed corporation.

He added that the government has already constituted a group of ministers (GoM) under his chairmanship to resolve all pending HRD-related issues such as pay fixation, pension, retirement benefits and job security.

The minister said these issues are under active consideration of the group and every effort will be made to resolve them as early as possible.

Paswan added that 19 out of the 36 HRD-related issues submitted by the staff federations have already been settled and these were within the competence of the department and an internal committee headed by member (finance) and other senior officers has been constituted to resolve them.

The issues which have been settled broadly relate to the training of employees, counting of past service for entry into the restructured cadre and regularisation of part-time casual labourers.    


Foreign Exchange

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UK £1	Rs.67.65	SW Fr 1	Rs. 26.35*
Euro	Rs. 41.86	Sing $1	Rs. 26.30*
Yen 100	Rs. 42.81	Aus $1	Rs. 25.90*
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Calcutta	Bombay

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