Export elixir in cash burst
Growth outlook dims
Sensex tumbles below 4000
Infy net vaults 134% in Q2
Philips parent to raise stake
HFCL firms up Rs 1000 cr buyout plan
Bajoria buying in Bombay Dyeing under Sebi watch
.Satyam sizzles
Foreign Exchange, Bullion, Stock Indices

Mumbai, Oct 10: 
The Reserve Bank today used a widely expected tame credit policy to bolster the financial markets even though it left the key reserve ratios unchanged in a package that relaxed the raft of forex curbs clamped on exporters after the rupee’s travails in the third week of July.

The mid-year review of Monetary and Credit Policy for 2000-01 unveiled guidelines that could widen the commercial paper (CP) market, change the way banks slot their investments and lend to the stock market. The new CP rules will make it easier for companies that have a P-2 credit rating from Crisil and other rating agencies to raise working capital.

Widely seen in many quarters as a lacklustre policy — largely because it did not have the customary revisions in the Bank Rate and the Cash Reserve Ratio (CRR) that have been a hallmark of these events until Jalan took over the top job at RBI — it did have a lot to boost the morale of exporters.

Banks will now credit 70 per cent of the inward remittances in the Export Earners Foreign Currency Accounts (EEFC) of export-oriented units in export-processing zones and software technology/electronic hardware parks. For all others, it will be 50 per cent. The move restores permissible remittances to the level allowed till August, when it was scaled down to 35 per cent due to the turbulence in the forex market.

Financial institutions will have to obtain a rating if they want to raise term deposits, and banks must provide the balance-sheets of their subsidiaries along with their own when they file their annual accounts with the central bank.

Jalan admitted it was package without ‘fireworks’, but stressed that it was designed to streamline short-term monetary instruments to achieve long-term stability and growth. “We have tried to delink short-term monetary measures from the annual policy announcement,” the RBI chief said.

Banks’ investment portfolio (including SLR securities and non-SLR securities) will now be classified under three categories: held to maturity, available for sale, and held for trading. The first need not be marked to the market, while the second will have to be sold within 90 days. If it is not, it should be shifted to the third slot. The general provision on standard assets (those serviced regularly) should be included in the Tier-II capital.

The ‘past due’ concept — essentially a 30-day grace period given to banks in the cases of loans where information is not available — has been scrapped.

Restrictions on the transferability period for certificates of deposits (CDs) issued by banks and financial institutions (FIs) are off. Companies which have been permitted to route call money transactions through primary dealers (PDs) up to December 2000 can do so for six more months now.    

Mumbai, Oct 10: 
The Reserve Bank of India (RBI) has scaled down its forecast for growth in gross domestic product (GDP) for the current financial year to 6-6.5 per cent from the 6.5-7 per cent.

The revision, made in its mid-term monetary and credit policy for 2000-01 unveiled today, comes just a day after finance minister Yashwant Sinha told a CII conference on Monday that there would be no review of the growth prognosis.

The figures have been calculated on the basis of CSO’s data, which had pegged first-quarter real GDP growth at 5.8 per cent compared with 6.9 per cent in the same period of 1999-2000.

According to the central bank, the behaviour of interest rates will depend on external market conditions, the overall rate of inflation, the demand for credit from the commercial sector and the government’s borrowing requirements.

RBI governor Bimal Jalan said concerns over rising inflation due to high oil prices were an exogenous factor which did not require tight monetary measures. He cited the moderate money supply (M3) growth of 15 per cent to calm price fears. Oil imports increased by $ 5.5 billion (nearly 100 per cent) in the first four months.

The policy said the Centre’s fiscal deficit was 24.3 per cent lower till August over last year. The key to budgetary balance will be disinvestment and the shortfall in the oil pool account.

All three apex chambers—CII, Ficci and Assocham—welcomed the credit policy, saying it was devoted to ushering in structural reforms in the banking sector, instead of mere tinkering with reserve ratios. However, most of them were unhappy with the group lending approach.    

Mumbai, Oct 10: 
Spectacular results from infotech major Infosys Technologies failed to entice the bulls today, with the 30-share BSE sensitive index breaching the psychological barrier of 4000 on a bear rampage to close at 3947.95, shedding 108.12 points from its previous close.

The mid-term review of the monetary policy by the Reserve Bank of India also failed to excite the stock markets. In fact, the revision of the GDP forecast for the current fiscal further dampened sentiments at the bourses.

Over 42 lakh shares were traded on the BSE today.

The sensex closed below the 4000-mark today after a span of four-and-a-half months, at 3945.28 as against yesterday’s close of 4056.07, netting a fall of 110.79 points or 2.73 per cent. The BSE-100 index dipped by 55.78 points to 1974.50 from its previous close of 2030.28. Broking circles fear that operators are still stuck with long positions as the sensex has tumbled by over 215 points in the past four sessions in low volumes.

Several key scrips were scarred by the bear rampage. Hindustan Lever (Re 1 paid-up) breached the 200 level to close at Rs 191.

Pressure on rupee

Heavy dollar demand from corporates and importers drove the rupee to close sharply lower against the US currency today after the central bank eased restrictions on the amount exporters can hold in their EEFC accounts. In fairly volatile trade at the interbank foreign exchange (forex) market, the rupee ended at 46.1750/1850 per dollar, lower from Monday’s closing levels of Rs 46.08/09.    

Mumbai, Oct 10: 
Continuing its dream run, software major Infosys Technologies Ltd today reported a net profit of Rs 154.01 crore for the second quarter ended September 30, a 134.38 per cent increase over Rs 65.71 crore during the corresponding period of the last fiscal.

The total income of Rs 465.67 crore for the second quarter indicated a growth of 113.73 per cent over Rs 217.88 crore for the quarter ended September 30, 1999.

Buoyed by the impressive growth, the board of directors of the company declared an interim dividend of Rs. 2.50 per share (50 per cent on par value of Rs 5 per share). The interim dividend paid in fiscal 1999 was Rs 1.50 per share (restated as 30 per cent on par value of Rs 5 per share).

However, the robust performance of the software major failed to impress the stock market and the Infosys scrip fell 1.48 per cent on the Bombay Stock Exchange to Rs 7,289 after a firm opening.

“Fortune 1000 companies continue to focus on e-enabling their businesses, leading to larger market opportunity for IT solutions providers,” said chairman and CEO N. R. Narayana Murthy.

The total income for the half-year ended September 30 was Rs 836.32 crore, an 108.08 per cent increase over Rs 401.94 crore for the corresponding period of the previous year. Net profit from ordinary activities was Rs 275.32 crore, a 117.95 per cent increase over the corresponding amount of Rs 126.32 crore for the half-year ended September 30, 1999.

“The new economy continues to offer unprecedented business opportunities. In order to tap these, we have proactively started work in the wireless and broadband areas,” said managing director, president and COO, Nandan M Nilekani. . .Satyam sizzles From Our special correspondent . .Hyderabad, Oct 10: Satyam Computers, the Hyderabad-based software company, recorded a 117.76 per cent jump in its net profit to Rs 66.94 crore for the second quarter ending September 30. Total income grew by 80.24 per cent to Rs 283.92 crore compared with Rs 157.52 crore in the corresponding period of September 30,1999.

The board of directors has recommended an interim dividend of Rs 0.36 per share (18 per cent on par value of Rs 2 per share).

Satyam group chairman B. Ramalinga Raju said the key reason for continued growth has been the focus on enlarging portfolio.    

Mumbai, Oct 10: 
Spooked by the rapid erosion in market share and loss of investor confidence in India, Royal Philips Electronics NV of the Netherlands today made open offers to acquire an additional 23 per cent stake in Philips India Ltd and 25.5 per cent in Punjab Anand Lamp Industries (PALI).

For Philips India the offer price is Rs 105 per share, while for Punjab Anand Lamp the Dutch electronics major has offered Rs 95 a share.

The announcement led to hectic trading in the Philips counter. The scrip hit an intra-day high of Rs 83.30 on the Bombay Stock Exchange before closing at Rs 81.70 after it opened at Rs 74.70. The PALI share also rose from Rs 48 to close at Rs 58 on the National Stock Exchange in thin trading.

The open offers are being managed by DSP Merrill Lynch and are scheduled to commence from November 13. The total cost to the Dutch major would be Rs 130 crore—Rs 110 crore to acquire 23 per cent additional stake of Philips India and Rs 20 crore for PALI’s 23.5 per cent stake.

At present, the Dutch major has a 51per cent equity stake in Philips India. It proposes to make an open offer for an additional 23 per cent which, if subscribed fully, will enhance its holding to 74 per cent in the Indian company. The offer price is at a premium of 46 per cent over yesterday’s closing price of Philips on the BSE and a premium of 55.5 per cent over the Sebi mandated price.

The Dutch major also has a 51 per cent equity stake in PALI, while another 23 per cent is held by Philips India. The open offer is for the outstanding 25.5 per cent. The offer price of Rs 95 is at a premium of 96 per cent over the closing price of PALI on the BSE on October 9.    

New Delhi, Oct 10: 
Himachal Futuristic Communications Ltd (HFCL) will invest Rs 1,000 crore for acquiring software and technology companies. The company has projected revenue growth of 150 per cent during 2000-01.

HFCL and Chinese telecom company, UTStarcom, today announced an agreement to jointly manufacture Personal Access System (PAS), a small phone which offers internet access.

“Of the total investment budget of Rs 1,000 crore for three years, this year’s acquisition target is about Rs 200 crore which would be used for taking up to 40 per cent stake in various infotech and convergence ventures in India that would be synergistic to HFCL’s line of business,” said Mahendra Nahata, chairman and managing director of HFCL.

The amount would be funded by internal accruals and the fund available within the cash-rich company.

Nahata said that HFCL would not be interested in picking up a mere 10 per cent stake in firms as it did not fall in line with the company’s non-organic growth strategy.

HFCL came into limelight in March this year, when Australian media major, Kerry Packer promoted Consolidated Press Holding picked up 10 per cent of equity for Rs 1,039 crore and announced three joint ventures.

The software joint venture company, formed out of the deal — Consolidated Futuristic Software Solutions Ltd — has approached Reserve Bank of India for setting up offices in Australia, Europe and the US, he said.

“The overseas offices are expected to be operational within three months of the approval,” he said.

Nahata further said that the e-commerce joint venture of the two companies — Excel Net Commerce — would start its operations by the end of this year.

“The e-commerce venture is expected to start its operations over the next two months,” he said.

Established in 1987, HFCL is a total telecom company that designs and manufactures telecom equipment and turnkey solutions.    

Calcutta, Oct 10: 
The Securities and Exchange Board of India has initiated a preliminary enquiry into jute baron Arun Bajoria’s acquisition of a 14 per cent stake in Bombay Dyeing.

“The purchase of such a huge number of shares appears to have violated the takeover norms,” said a senior Sebi official, echoing the complaint of the Nusli Wadia-owned textile company. “But we cannot take any legal action until or unless we are sure that the violation of the code took place.” Bajoria is believed to have invested around Rs 60 crore over the last few months to corner the shares of the textile major, which is currently undergoing some financial problems.

Media reports said Bajoria had bought the shares over a six-month period. All the shares were held in the dematerialsed form and were automatically transferred in Bajoria’s name without the promoters, who hold a 31 per cent stake in the company, getting wind of it until it was too late.

This is perhaps the first time that a “takeover raid” is being used through the demat route which ensures transparent trading and easy share transfer. In the past, company managements were able to stall these transfers and the predators were kept at bay till the issue was resolved through a long drawn out legal battle.

Bajoria has already been debarred by the Company Law Board from exercising any voting rights in respect of the Bombay Dyeing shares until the case is disposed of. The next CLB hearing is expected in two months’ time.

While Bajoria could not be available for comment, one of his close associates said the punter was contemplating legal recourse against the CLB’s interim order. “ Bajoria is yet to make a decision on the CLB order. But he is likely to move Mumbai High Court to vacate the order,” he said.

He also pointed out that Bajoria was weighing the options of coming out with an open offer to buy 20 per cent additional shares, based on the average price of the last six months.

“Bajoria may even offer a better price for the takeover of additional shares because he feels the intrinsic value of the scrip is not properly reflected in the current stock price,” the associate said.

A senior official of a financial institution said the FIs, which hold around 17 per cent in the company, might consider a selloff if the takeover strengthens the management of the company.

“We will back whoever can manage the company in a better way,” an official said.

Sources say Bajoria, who is a known corporate raider, can hold immense power if he manages to corner another 10-12 per cent stake in the company.    

Hyderabad, Oct 10: 
Satyam Computers, the Hyderabad-based software company, recorded a 117.76 per cent jump in its net profit to Rs 66.94 crore for the second quarter ending September 30. Total income grew by 80.24 per cent to Rs 283.92 crore compared with Rs 157.52 crore in the corresponding period of September 30,1999.

The board of directors has recommended an interim dividend of Rs 0.36 per share (18 per cent on par value of Rs 2 per share).

Satyam group chairman B. Ramalinga Raju said the key reason for continued growth has been the focus on enlarging portfolio.    

Foreign Exchange
US $1	Rs 46.18	HK $1	Rs 5.85*
UK £1	Rs 67.31	SW Fr 1	Rs 25.95*
Euro	Rs 40.36	Sing $1	Rs 26.00*
Yen 100	Rs 42.73	Aus $1	Rs 24.20*
*SBI TC buying rates; others are forex market closing rates


Calcutta		Bombay
Gold Std (10gm)	Rs 4545	Gold Std (10 gm)	Rs 4510
Gold 22 carat	Rs 4290	Gold 22 carat	Rs 4170
Silver bar (Kg)	Rs 7975	Silver (Kg)	Rs 8095
Silver portion	Rs8075	Silver portion	Rs 8100

Stock Indices

Sensex	3945.28	-110.79
BSE-100	1974.50	-55.78
S&P CNX Nifty1238.92	-28.35
Calcutta	108.30	-3.36
Skindia GDR	603.02	-12.72

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